Cryptocurrency, which is also called virtual or digital currency is a digital asset aimed to work in the same way as manual or cash currency as a means of exchange, but contrary to traditional currency, cryptocurrency is decentralized which is in stark opposition to how centralized banking systems work.
Firstly, the term "HODL" was used in December 2013 when an online forum user named GamerKyuubi honestly confessed: "I AM HODLING". By the time Bitcoin's value decreased to just $1,100. In the post, he wrote that he had bad trading skills, which led to his unbreakable commitment to holding onto his Bitcoin. At this time, the whole "HODL" philosophy was born, and GamerKyuubi was convincing others to follow it by holding their bitcoin in a bear market.
This week perhaps turned out to be the most important one of the last years for the cryptocurrency scene, as the market has found a new rising point and is expected to continue in this way. After a couple of stagnant months, the value of crypto seems to be beginning to rise, almost ending the so-called “crypto winter.”
Like almost everything that happens in the crypto market, it’s measured by the development of the main currency, Bitcoin. Since November 2022, its price has collapsed drastically. Even many experts indicated that it was the end of the dream of digital economies. It seems that two years later, this is not the case. Bitcoin has been charting a rise of 144% for a year. And the high price lately indicates that this is for the long haul.
According to specialists, this is not just an ordinary rally, but rather we are talking about a hint of what is to come. For various reasons that we will explain later, supported by fundamentals and technical devices of the market, Bitcoin and the other cryptos seem ready to start an advance and try to surpass the all-time high after several months of uncertainty.
ETF, the reason for growth.
The main cause of this powerful Bitcoin gallop is due to the Bitcoin ETF proposed by BlackRock. But to fully understand the substance of this opinion, it is necessary to explain some concepts. First and foremost, what is BlackRock? BlackRock is a multinational investment company, based in New York, that is specifically characterized by persuading the traditional market to break down its returns in the cryptocurrency market. The ETF is a type of investment that is managed with Bitcoin. What does this mean? BlackRock has been seeking approval for a Wall Street exchange-traded fund for some time. This fund is pegged to and tracks the value of Bitcoin. It’s traded on the ball, just like any stock or bond, but with the particularity that it only has Bitcoin.
Recently, there is a reliable expectation from regulators that this ETF, which is called: ProShares Bitcoin Strategy, will be approved. In this way, you could lose or gain Bitcoins, without needing to own them. BlackRock has stated that it relied on a secret investor, such as seed capital, to initiate financing for this product. That investment was $100,000. It’s strange to think that a company of such magnitude had to depend on another party to provide the necessary resources to promote the fund. This clearly means that there may be evidence, or proof, that the approval of ProShares will occur in the coming weeks.
The halving: How does this affect the end of the cycle?
The halving is known as the end of the cycle. What is halving specifically? Maybe we have to explain the process of Bitcoin generation. Blockchains are generated thanks to miners, who are responsible for investing to ensure the system that a new blockchain respects the basic and elemental consonances that it must have to be part of Bitcoin, or any other crypto. Miners are rewarded with a portion, a percentage, of those new Bitcoins. The format of Bitcoin is that every certain time this reward is reduced by half. This limitation process is called halving and usually happens approximately every 4 years. Basically, the pace of issuance of digital currencies is reduced. The last one was in 2020 and the next one is expected to happen in April 2024.
How does this affect the crypto market? The reality is that we don't know. Conjectures can be made, obviously. To give an example, until now, previous halving have responded positively in the market. The downside in this sense is that many investors are choosing to invest in public bonds or much more conservative assets. In this way, we can say that the government's role in the coming months is crucial. If the Federal Reserve begins to reduce interest rates in the crypto movement, it would clearly support the possible acceptance of the ETF.
The importance of altcoins.
Altcoins are cryptocurrencies that are not popular, like Bitcoin or Ethereum. In the world of crypto, there are many currencies that, although they don’t generate major changes in the flow of the market, they collaborate with its dynamics. While many stop working before they gain power, others will always continue to be developed, since Bitcoin is open source. Currently, what is clear is that projects that are solid and can survive in difficult times in the market are very likely to end up as successful businesses. These types of altcoins must have support from their communities to generate longevity in their evolution. The ability to adapt is what will make them survive. As always, you will depend on the technology and innovation of your product to generate relevance in the market.
The moment for Ethereum.
With the case of Ethereum, which is the second most important crypto, the rise that Bitcoin proposed in these weeks also continued. Even though Ethereum is ranked number 2 in terms of market capitalization, this currency has suffered a constant up and down lately that has called into question its veracity and its resilience. However, they also remain very optimistic since they reached the historical maximum, which they have not reached since 2022. The cause of this new elevation is called The Merge. Ethereum has been updated, merging with another blockchain to modernize its use. In this way, not only does it have an aesthetic platform, but it has reduced energy consumption. This is how this transformation not only demonstrates that it is technically better prepared, but also offers a much more rewarding user experience.
What is clear is that the cryptocurrency market is far from being obsolete or seeming like a frustrated promise, as many indicated in the decline a couple of years ago. What's more, he is in his best moment. Many indicate that Bitcoin can reach its all-time high before the end of next year and reach a legendary rise only in 2025. Therefore, patience is key in this type of business. And as always, the role of the Government, the States and the New York Stock Exchange is also vital.