Cryptocurrency value

Why cryptocurrency value rises again as BTC and Ethereum approach new highs

Bitcoin is on the rise again and could hit a new high this week as the cryptocurrency market continues to strengthen.

As of Monday morning, he was valued at around $ 65,800 ($ 48,800) after spending just under $ 63,000 (£ 46,700) overnight.

Ethereum, the world’s second largest cryptocurrency, also posted gains, reaching a new record high of $ 4,765 (£ 3,532).

Dogecoin has also gained in value, although its imitator, Shiba Inu Coin, which has risen in recent times, has fallen by around 2%.

Why is Bitcoin increasing?

Bitcoin and other cryptocurrencies have seen very strong growth in the last month or so. There are still a myriad of factors influencing their price, but one of the biggest was the launch of the first exchange-traded fund (ETF) based on US Bitcoin futures, which opened last month.

Put simply, an ETF allows people to invest in something without having to buy it, much like buying shares in a company.

As Investopedia explains, “An exchange-traded fund (ETF) is a type of security that tracks an index, sector, commodity, or other asset, but can be bought or sold on the stock exchange in the same way as a common stock. . An ETF can be structured to track anything from the price of an individual commodity to a large and diverse collection of securities. “

They allow people to buy a slice of a diversified portfolio, rather than a single asset.

They also open up the market to a lot more, and potentially a lot bigger, investors who may not have been willing to buy coins through crypto exchanges, which can be tricky at times and is considered riskier. The ETF allows investors to make Bitcoin in a more traditional way.

Matt Senter, CTO of Bitcoin Lolli Rewards App, said The independent: “A Bitcoin ETF will provide even more exposure to Bitcoin for those who may be hesitant to buy it directly from an exchange.

By allowing individuals to invest in Bitcoin through ETFs that track its underlying value, investors can become familiar with Bitcoin while implementing aspects of the ownership experience that can be intimidating for crypto newbies. , such as browsing exchanges, wallets and private keys. “

Another reason for the surge in prices is the increased interest in decentralized finance, or DeFi.

This is a new trend that aims to create financial applications like blockchain lending and trading.

What could happen next?

Cryptocurrency prices are very difficult to predict because they can lose value as quickly and easily as they do, and without warning.

Banking giant JPMorgan has suggested that Bitcoin could reach around $ 146,000 in the long run (£ 108,000), but could also drop to $ 35,000 (£ 26,000).

Analysts said: “This calls into question the idea that a price target of $ 100,000 or more, which appears to be the current consensus for 2022, is a sustainable bitcoin target in the absence of a significant drop. bitcoin volatility.

“Digital assets are on a multi-year structural ascent, but the current entry point looks unappealing.”

Should I invest in cryptocurrency?

People invest at their own risk and cryptocurrencies are not regulated by the UK financial authorities.

All crypto investments are risky, but coins like Shiba Inu are particularly volatile and you should be prepared to lose whatever you invest.

The Financial Conduct Authority (FCA) warned in January: “Investing in crypto-assets, or related investments and loans, usually involves taking very high risks with investor money.

“If consumers invest in these types of products, they should be prepared to lose all of their money. “

Susannah Streeter, Senior Investment and Markets Analyst, Hargreaves Lansdown previously explained the risks of I.

She said: “In addition to being extremely volatile, most cryptocurrencies are unregulated, which not only adds another layer of uncertainty, but also means investors have little to no protection against the risk. fraud.”

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