Bitcoin

2 reasons to buy Bitcoin like there’s no tomorrow

Published

9 months ago

9 May, 2024

2 reasons to buy Bitcoin like there's no tomorrow

In the last two months, Bitcoin (CRYPTO:BTC) has lived up to its reputation as one of the most volatile assets in the world. After reaching a new all-time high of $73,750 in mid-March, Bitcoin it quickly fell below $57,000 in late April.

For now, Bitcoin has recovered well to the $62,000 level. But questions still remain about where Bitcoin will go in 2024. Is Bitcoin overvalued or undervalued at its current price? To answer this question, let’s take a closer look at two main catalysts.

Bitcoin ETF Inflows

It all starts with the new Spot Bitcoin exchange-traded funds (ETFs). During the first four months of 2024, massive investor flows into these ETFs led to a huge rally in the price of Bitcoin. The new Bitcoin ETFs in sight – led by iShares Bitcoin Trust (NASDAQ: IBIT) and the Fidelity Wise Origin Bitcoin Fund – quickly accumulated more than 30 billion dollars in assets under management. They have found wide acceptance from investors. At one point, the iShares Bitcoin Trust had a 71-day streak of positive net inflows.

Gold coin with Bitcoin symbol.

Image source: Getty Images.

Admittedly, there was a notable pullback in the amount of new money flowing into these ETFs last month as the price of Bitcoin fell. But now we are preparing for what could be considered the “second round” of these ETFs. According to Black stone, issuer of the iShares Bitcoin Trust, the next round of ETF buyers will include three important types of institutional investors: sovereign wealth funds, pension funds and endowments. Combined, this will represent another huge influx of new money into Bitcoin, helping to support its price for the foreseeable future.

The halving

The second main reason to buy Bitcoin now is the halving. This event, which took place on April 19, resulted in the rewards paid to Bitcoin miners being halved. On the surface, this might not seem like a big deal. But this process sets off a chain reaction of events that (a) increases Bitcoin’s scarcity and (b) cements its status as a disinflationary asset.

Both results are very important for investors. Increasing the perceived scarcity of any asset should increase its price, and it is no different with Bitcoin. Furthermore, investors are always clamoring for inflation-resistant assets. By combining these two resources into a single asset, you should have a fantastic long-term store of value.

For this reason, halving events have historically been very bullish for Bitcoin. After the previous halving (which took place in May 2020), for example, the price of Bitcoin went parabolic. On May 11, 2020, the price of Bitcoin was $8,600. At the end of the year, Bitcoin was trading at around $30,000 per coin. The price of Bitcoin would eventually reach a new all-time high of $69,000 in 2021. Given that similar patterns occurred following halving events in 2012 and 2016, it is easy to see why crypto investors are hoping for repeat performance.

The story continues

The only problem is that this year’s halving was a bit lackluster. When it occurred in mid-April, Bitcoin was trading at around $64,000. More than two weeks later, it is still trading around the $64,000 level. Additionally, there was a worrying drop to around $57,000 along the way. This was completely unexpected – the Bitcoin halving was supposed to lead to a higher price, not a lower price!

Don’t believe the hype?

And that brings me to an important warning for stock investors who are new to crypto. Bitcoin can be a riskier investment than buying an individual stock, mainly due to its volatility. There were many reminders of this in 2024, with Bitcoin rising or falling 10% in a single day. And keep in mind that some of the world’s smartest investors – including billionaire Warren Buffett – say they have no intention of buying Bitcoin.

That said, it’s hard not to see the new Bitcoin ETFs as a real game changer. They are democratizing crypto for small retail investors while making Bitcoin popular enough for even the largest institutional investors. As long as investors of all sizes continue to invest their money in these ETFs, I will buy Bitcoin like there is no tomorrow.

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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions and recommends Bitcoin. The motley fool has a disclosure policy.

2 reasons to buy Bitcoin like there’s no tomorrow was originally published by The Motley Fool

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We are the editorial team of Altcoin Updates, where seriousness meets clarity in cryptocurrency analysis. With a robust team of finance and blockchain technology experts, we are dedicated to meticulously exploring complex crypto markets with detailed assessments and an unbiased approach. Our mission is to democratize access to knowledge of emerging financial technologies, ensuring they are understandable and accessible to all. In every article on Altcoin Updates, we strive to provide content that not only educates, but also empowers our readers, facilitating their integration into the financial digital age.

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Bitcoin

Bitcoin (BTC), Stocks Bleed as China’s Surprise Rate Cut Signals Panic, Treasury Yield Curve Steepens

Published

6 months ago

25 July, 2024

AltcoinUpdates Staff

Bitcoin (BTC), Stocks Bleed as China’s Surprise Rate Cut Signals Panic, Treasury Yield Curve Steepens

Risk assets fell on Thursday as China’s second rate cut in a week raised concerns of instability in the world’s second-largest economy.

Bitcoin (BTC)the leading cryptocurrency by market cap, is down nearly 2% since midnight UTC to around $64,000 and ether (ETH) fell more than 5%, dragging the broader altcoin market lower. The CoinDesk 20 Index (CD20), a measure of the broader cryptocurrency market, lost 4.6% in 24 hours.

In equity markets, Germany’s DAX, France’s CAC and the euro zone’s Euro Stoxx 50 all fell more than 1.5%, and futures linked to the tech-heavy Nasdaq 100 were down slightly after the index’s 3% drop on Wednesday, according to the data source. Investing.com.

On Thursday morning, the People’s Bank of China (PBoC) announced a surprise, cut outside the schedule in its one-year medium-term lending rate to 2.3% from 2.5%, injecting 200 billion yuan ($27.5 billion) of liquidity into the market. That is the biggest reduction since 2020.

The movement, together with similar reductions in other lending rates earlier this week shows the urgency among policymakers to sustain growth after their recent third plenary offered little hope of a boost. Data released earlier this month showed China’s economy expanded 4.7% in the second quarter at an annualized pace, much weaker than the 5.1% estimated and slower than the 5.3% in the first quarter.

“Equity futures are flat after yesterday’s bloody session that shook sentiment across asset classes,” Ilan Solot, senior global strategist at Marex Solutions, said in a note shared with CoinDesk. “The PBoC’s decision to cut rates in a surprise move has only added to the sense of panic.” Marex Solutions, a division of global financial platform Marex, specializes in creating and distributing custom derivatives products and issuing structured products tied to cryptocurrencies.

Solot noted the continued “steepening of the US Treasury yield curve” as a threat to risk assets including cryptocurrencies, echoing CoinDesk Reports since the beginning of this month.

The yield curve steepens when the difference between longer-duration and shorter-duration bond yields widens. This month, the spread between 10-year and two-year Treasury yields widened by 20 basis points to -0.12 basis points (bps), mainly due to stickier 10-year yields.

“For me, the biggest concern is the shape of the US yield curve, which continues to steepen. The 2- and 10-year curve is not only -12 bps inverted, compared to -50 bps last month. The recent moves have been led by the rise in back-end [10y] yields and lower-than-expected decline in yields,” Solot said.

That’s a sign that markets expect the Fed to cut rates but see tighter inflation and expansionary fiscal policy as growing risks, Solot said.

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Bitcoin

How systematic approaches reduce investor risk

Published

6 months ago

25 July, 2024

AltcoinUpdates Staff

How systematic approaches reduce investor risk

Low liquidity, regulatory uncertainty and speculative behavior contribute to inefficiency in crypto markets. But systematic approaches, including momentum indices, can reduce risks for investors, says Gregory Mall, head of investment solutions at AMINA Bank.

July 24, 2024, 5:30 p.m.

Updated July 24, 2024, 5:35 p.m.

(Benjamin Cheng/Unsplash)

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Bitcoin

India to Release Crypto Policy Position by September After Consultations with Stakeholders: Report

Published

6 months ago

25 July, 2024

AltcoinUpdates Staff

“The policy position is how one consults with relevant stakeholders, so it’s to go out in public and say here’s a discussion paper, these are the issues and then stakeholders will give their views,” said Seth, who is the Secretary for Economic Affairs. “A cross-ministerial group is currently looking at a broader policy on cryptocurrencies. We hope to release the discussion paper before September.”

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Bitcoin

Bitcoin (BTC), Ether (ETH) slide as risk aversion spreads to crypto markets

Published

6 months ago

25 July, 2024

AltcoinUpdates Staff

Bitcoin (BTC), Ether (ETH) slide as risk aversion spreads to crypto markets

Ether, the second-largest token, fueled a slide in digital assets after a stock rout spread unease across global markets.

Ether fell about 6%, the most in three weeks, and was trading at $3,188 as of 6:45 a.m. Thursday in London. Market leader Bitcoin fell about 3% to $64,260.

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