Bitcoin prices have been under pressure since the ETF was approved. However, just recently, the price of the OG cryptocurrency rose to his $47,000 level, causing positive sentiment among investors. However, Bloomberg said in a report that the rise in Bitcoin prices may not be enough to sustain the crypto market.
FTX's decline and altcoin's wild swings reflect the volatile cryptocurrency market
According to Bloomberg, crypto investors now believe digital currencies are making a comeback. After several court challenges, the U.S. Securities and Exchange Commission finally approved a Bitcoin exchange-traded fund. A resurgence of investor interest in high-risk assets, including technology stocks, appears to be spilling over into tokens as well.
However, the experience of cryptocurrency traders is not fully reflected in the pricing of some major coins such as Bitcoin and Ether. The cryptocurrency market is still dented by several issues. If investors had entered the crypto space in 2021, Sam Bankman Fried’s FTX exchange might have looked like a smart investment. In addition to Bitcoin, he had 12,000 smaller “altcoins” to experiment with. Many of these altcoins have disappeared or are highly volatile, with many warning that a widespread pump-and-dump trading phenomenon is driving up the value of the tokens.
Investors hold investments from other tokens
Unlike traditional financial markets, where investors view volatility as a disadvantage, in the crypto market excessive volatility is seen as an opportunity to generate greater profits. A research paper published in Science Direct shows that crypto investors follow behavioral trading patterns that emphasize temporary trends. Hourly and daily frequencies are also used for large, high-sentiment trades. These findings support the idea that there is noisy trading in the cryptocurrency market. The concept of lottery-like demand drives investors to seek out cryptocurrencies. Demand is driven by large dividends, distancing them from the risk of stock market crashes. This study shows that crypto investors are motivated to take risks.
In the case of Bitcoin, a spike in price usually results in better returns. However, more volatile and lower value altcoins typically take longer to return. It is highly unlikely that these altcoins will pay out as well. This typically forces investors to refrain from investing in secondary tokens.
Bitcoin price and outlook today
Bitcoin price has recovered above the $49,000 level after previously falling as low as $43,000. At the time of this writing, the OG cryptocurrency is trading at $49,741.70, up almost 3.2% in the past 24 hours. Compared to the same time yesterday, BTC market capitalization increased by 3.17% to $75.7 billion.
The outlook for many cryptocurrencies is expected to be positive this year, especially Bitcoin. Various institutions are betting that the price of OG crypto will rise in the future. This includes Bitwise's prediction that the price of Bitcoin will exceed his $80,000 mark in 2024. According to Coinbase, institutional investment in Bitcoin will remain the main focus for at least the first half of 2024.
