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By Mr Edul Patel
Over the past year, Bitcoin's trajectory has soared, starting from $23,000 and reaching a new all-time high of $74,000. Bitcoin is up by over 142% in the past one year which shows growing adoption and demand.
Factors Driving Bitcoin Surge
Rising Institutional Interest: Institutional players are showing heightened interest in Bitcoin, driven by recent regulatory advancements. The approval of Bitcoin spot ETFs by the SEC in January sparked a surge in institutional participation. Currently, these 11 ETFs are acquiring nearly ten times the amount of newly mined Bitcoin, indicating a growing demand and increased trading activity.
Additionally, there has been an increase in the number of addresses holding significant Bitcoin reserves. BlackRock's Bitcoin ETF swiftly accumulates coins, surpassing even established entities like MicroStrategy.
Progressive Regulatory Clarity: Regulatory clarity surrounding cryptocurrencies has been steadily improving globally over the past year. Initiatives like the Markets in Crypto Assets (MiCA), effective since June 2023, and India's integration of cryptocurrencies into PML guidelines are emblematic of this trend.
In the UK, as of last October, firms intending to market crypto assets to retail consumers must obtain authorization or registration from the Financial Conduct Authority (FCA). The approval of spot Bitcoin ETFs in the USA has also enhanced the industry's legitimacy, attracting both institutional and retail investors.
Approaching Bitcoin Halving: With the upcoming Bitcoin Halving scheduled for April, both retail and institutional players are closely monitoring this pivotal event. Historically, Bitcoin Halving has led to price surges, influencing similar trends in other cryptocurrencies. Consequently, anticipation surrounding this event is driving heightened activity and investment in the cryptocurrency space.
Increasing Awareness of Crypto: The growing interest from institutional investors and established financial institutions has lent credibility to the crypto market. Educational initiatives aimed at demystifying cryptocurrencies and blockchain technology have proliferated. As regulatory frameworks evolve, investors and businesses gain a clearer understanding of the legal landscape, including tax treatment, licensing requirements, and investor protections, fostering confidence and broader participation in cryptocurrency markets.
What Should Investors Do?
1. Research: Conduct thorough research on Bitcoin and the overall cryptocurrency market. Understand the technology, fundamentals, and any recent developments that may impact prices.
2. Evaluate Risk: Before investing, assess your risk tolerance. Cryptocurrency markets are volatile, with prices prone to sudden and unpredictable fluctuations.
3. Embrace Diversification: Avoid overexposure to any single asset by diversifying your investment portfolio across various asset classes. Spreading your investments helps mitigate risk.
4. Adopt Long-term Thinking: Instead of attempting to time the market, consider adopting a long-term investment strategy. Focus on the potential growth of your investments over time.
5. Implement DCA (Dollar Cost Averaging): Invest a fixed amount regularly regardless of market conditions. This strategy smooths out volatility and potentially capitalizes on long-term market growth while mitigating timing risks.
6. Stay Informed: Stay informed about market trends, regulatory developments, and macroeconomic factors that may influence the cryptocurrency market. This information can help you make more informed investment decisions.
Author Bio
Mr Edul Patel is CEO of Mudrex, a Global Crypto Investment Platform.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.