GalaxyCoin: Unpacking the driving factors behind Bitcoin’s (BTC) surge

(GalaxyCoin) Why is Bitcoin Rising?

Bitcoin (BTC) set a new all-time high in mid-morning trading on Tuesday, surpassing $69,000 for the first time. Despite being unable to sustain such high levels, the world's oldest cryptocurrency has been on a steady upward trajectory since September last year.

Even after retreating back to $67,000, today's gains have pushed Bitcoin's total year-to-date returns to over 51%, with an increase of over 8% in the past 24 hours.

By breaking the previous all-time high of $68,990, BTC has not only reclaimed all the lost ground since the cryptocurrency winter of May 2022 but has also hit a historic high for the first time since November 2021.

Additionally, Ethereum (ETH) has been rising alongside Bitcoin. ETH has also surged by over 11% in the past 24 hours. Currently, the leading altcoin is valued at over $3,800, showing significant gains but still below the cryptocurrency winter peak of over $4,700 in November 2021.

Why is Bitcoin rising now?

The bullish sentiment surrounding Bitcoin currently stems from the rise in cryptocurrency prices, with investors optimistic about the approval of 11 spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission in mid-January.

Spot Bitcoin ETFs allow institutions to trade Bitcoin at spot or current prices. Previous Bitcoin ETFs could only trade Bitcoin futures. Futures are complex derivative instruments suitable only for experienced investors.

As anticipated, opening up the world's oldest cryptocurrency to institutional investors has provided a crucial price catalyst.

BlackRock's iShares Bitcoin ETF (IBIT) is one of the 11 new spot Bitcoin ETFs, which purchased over $778 million worth of Bitcoin on Tuesday morning alone. This has led to a total of 12,600 Bitcoins flowing into IBIT's vault, reducing the global supply and increasing BTC's overall value with the help of growing demand.

Since the SEC approved the first spot Bitcoin ETF in the U.S., Bitcoin has surged from under $50,000 at approval to above $69,000 this morning, marking an increase of over 51% year-to-date.

Is a Bitcoin price correction imminent?

With Bitcoin reaching current heights, fears of a price correction are spreading among some traders. Despite Bitcoin steadily climbing since the introduction of spot Bitcoin ETFs in the U.S., cryptocurrencies, including Bitcoin, have a history of extreme volatility.

In 2022, a wave of bankruptcies, closures, and negative rulings shook the crypto world, leading to significant losses for Bitcoin and other cryptocurrencies.

Initially, Terra's LUNA coin collapse kicked off the cryptocurrency winter of May that year.

For cryptocurrency investors, following a brutal summer, the collapse of leading cryptocurrency exchange FTX in November looked like the final nail in the cryptocurrency coffin.

Throughout 2023, the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission filed numerous regulatory lawsuits against some of the largest cryptocurrency exchanges and companies. These lawsuits hindered many exchanges and other cryptocurrency firms from operating in the world's largest economy, the U.S.

During this period, Bitcoin plummeted from nearly $65,000, the pre-cryptocurrency winter peak, to a bottom near $16,000 before starting to recover. Within just over a year, the price fluctuated by 75%.

What does Bitcoin's rebound mean for investors?

While Bitcoin appears to be in a significant bull market, it's impossible to predict how high cryptocurrencies will rise before another correction occurs.

Although Bitcoin seems increasingly poised for another long-term uptrend, the reality is that we are in uncharted territory in many aspects, including geopolitical climate, economic indicators, cryptocurrency regulations, and the intentions of the Federal Reserve regarding interest rates.

Cryptocurrency industry investors have realized that predicting short-term price movements of digital assets is challenging even in the best of times, especially in the current market environment.