As stated in a Bloomberg report, the surge in Bitcoin’s value might not have the capacity to sustain the cryptocurrency markets.
Bitcoin’s valuation has been under duress ever since the approval of the ETF. However, in recent times, the value of the original cryptocurrency has marginally risen to $47,000, evoking a favorable outlook among investors. Bloomberg, however, argues in a report that the Bitcoin price surge may not be sufficient to sustain cryptocurrency markets.
FTX Fall And Altcoin Pump
Bloomberg reports that at the moment, cryptocurrency investors are optimistic regarding the resumption of digital currencies. Following court pressure, the US Securities and Exchange Commission has granted approval to Bitcoin exchange-traded funds. Renewed investor enthusiasm for high-risk assets, such as technology equities, has also extended to tokens.
Notwithstanding this, the pricing of a limited number of prominent cryptocurrencies, such as Bitcoin and Ether, does not entirely mirror the experiences of cryptocurrency traders.
The cryptocurrency market continues to be plagued by a few issues. Had an investor ventured into cryptocurrencies in 2021, the FTX exchange established by Sam Bankman-Fried might be a prudent investment destination.
Furthermore, apart from Bitcoin, an additional 12,000 lesser “altcoins” were available for experimentation. Many of these alternative cryptocurrencies either cease to exist or exhibit significant volatility, indicating that token values are inflated due to a prevalent pump-and-dump trading phenomenon.
Other Token Investments
In contrast to conventional financial markets, where investors tend to perceive volatility negatively, the cryptocurrency market perceives excessive volatility as an opportunity to attain greater profits.
A study published in Science Direct provides evidence that investors in cryptocurrencies adhere to behavioral trading patterns that prioritize short-lived trends. Additionally, hourly and daily frequencies are employed in high-volume, high-emotion transactions.
These findings support the hypothesis that the cryptocurrency market is subject to chaotic trading. The notion of demand resembling a lottery motivates investors to seek out cryptocurrencies.
Large payouts motivate demand, which is motivated by the desire to distance oneself from the risk of a stock market collapse. According to this study, cryptocurrency investors are driven by a propensity for undertaking risks.
Generally, a Bitcoin price increase results in greater returns. However, returns on less valuable and more volatile cryptocurrencies typically require materializing time. It is highly improbable that these altcoins will compensate as well. Naturally, this discourages investors from making investments in secondary tokens.
Bitcoin Price And Outlook Today
Bitcoin prices have risen above the $49,000 threshold following a previous decline to $43,000. As of the moment of composition, the OG cryptocurrency was valued at $49,741.70, reflecting a twenty-four-hour increase of approximately 3.2%. Since the same time yesterday, the market capitalization of Bitcoin has increased by 3.17 percent to $75.7 billion.
This year’s outlook for numerous cryptocurrencies is optimistic, with Bitcoin in particular. Numerous institutions have placed wagers on the OG-cryptocurrency experiencing a future price increase.
This includes the prediction by Bitwise that the cost of Bitcoin will exceed $80,000 by 2024. Coinbase predicts that institutional investment in Bitcoin will remain the primary focus for at least the first half 2024.