According to Khac Hieu
Investing.com – The cryptocurrency market enters the final weeks of 2023 in a stronger state than at the beginning of the year. Analysts say that in 2024, the concern of cryptocurrency investors will be the interest rate moves of central banks and whether US authorities will license the opening of exchange-traded funds (ETFs). ) bitcoin spot or not.
2022 is a difficult year for the cryptocurrency sector, as the price of this asset plummets and a series of consecutive scandals occur, including the collapse of virtual currency exchange FTX and accusations of corruption. Criminal charges against Sam Bankman-Fried, founder and CEO of this exchange. All of these reduce the reputation and image of the entire field.
But this year, 2023, the price of bitcoin – the largest cryptocurrency and considered a barometer of the health of the entire cryptocurrency sector – has increased two and a half times, on track to end the year in its strongest state. since 2020. Just last week, bitcoin price at one point reached nearly 45,000 USD, the highest in 20 months.
What factors are driving Bitcoin’s price increase?
The price at nearly 11:00 a.m. today (December 13) Vietnam time stood at 40,834 USD, down more than 2.4% compared to 24 hours ago and down nearly 7% compared to 1 week ago, according to Coimarketcap.com.
The cryptocurrency market is being buoyed by expectations that Cooling inflation will allow major central banks, especially the US Federal Reserve (Fed), to begin lowering interest rates in 2024.. Falling interest rates will make riskier assets like virtual currencies more attractive.
In addition, the market is also placing great expectations on the US Securities and Exchange Commission (SEC) approving the opening of a bitcoin spot ETF. Such funds are expected to help attract a large amount of capital to flow into the cryptocurrency market, especially from institutional investors.
According to analysts, these factors, along with the “halving” event – the process of halving the reward for mining bitcoin – expected to take place in April, will support bitcoin prices in particular and overall cryptocurrency market next year. “Halving” aims to gradually reduce the new supply of bitcoin to limit the final total amount of bitcoin in circulation to 21 million, of which 19 million have been created to date. To date, bitcoin has gone through three “halvings”, most recently in 2020.
However, some analysts have a cautious view that bitcoin prices are unlikely to repeat the record set in 2021.
“The bitcoin bubble has burst because of rising interest rates. And what will probably bring bitcoin prices back up is falling interest rates,” said head of research at digital asset management company CoinShares, Mr. James Butterfill, according to Reuters.
Bitcoin price set a record of 69,000 USD in 2021 thanks to the buying power of individual investors with large amounts of cash on hand at the beginning of the Covid-19 pandemic and in a historically low interest rate environment.
In addition, another factor driving the rise of the leading cryptocurrency is expectations Bitcoin Spot ETF. Next year, scandals are likely to continue in the cryptocurrency sector. Among them is the fact that Binance and its CEO, Changpeng Zhao, pleaded guilty to violating US regulations on anti-money laundering. However, the opening of a bitcoin spot ETF would help legitimize the cryptocurrency industry.
A series of major financial companies, including BlackRock, have filed documents with the SEC to open a spot bitcoin ETF. According to analysts, the establishment of such funds can attract billions of dollars in capital from institutional investors to pour into the cryptocurrency market.
According to Reuters, the virtual currency industry’s negotiations with the SEC are stepping up ahead of an important deadline in January. That is when the SEC is expected to make a decision to approve a number of applications to open a bitcoin ETF. delivered immediately. This makes traders very optimistic, although a sell-off is still possible.
“Bitcoin prices may adjust as soon as the spot bitcoin ETF opens, as the fund’s approved move appears to have been reflected in the market in advance. However, in the long term, such funds can attract many billions of dollars of investment capital each year into the bitcoin market,” said analyst Yuya Hasegawa of Japanese cryptocurrency exchange Bitbank.
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