Watan-The British newspaper “The Guardian” highlighted in a report the reasons behind the rise in Bitcoin prices after more than two years since its previous peak.
In 2008, Satoshi Nakamoto created Bitcoin, a cryptocurrency based on blockchain technology, which facilitates direct online payments from one party to another without the need for a financial institution.
To solve the problem of “double spending,” where someone duplicates or forges digital currency, transactions are recorded in a globally accessible ledger called the “blockchain.”
Transactions are protected through a form of encryption called public and private key encryption, allowing transactions to occur without the need for a financial intermediary, according to “The Guardian.”
A significant rise in the price of Bitcoin
The newspaper reported that the price of Bitcoin reached a new record value surpassing the previous peak of just under $69,000.
Although the price of Bitcoin later dropped to just over $64,000, the market value of this currency is now around $1.3 trillion.
This significant increase is part of the total cryptocurrency market, which is worth $2.6 trillion.
Reasons for people’s interest in Bitcoin
Bitcoin has gained significant popularity due to its anti-authoritarian stance, described by commentator Tim Swanson as “uncensored digital money.”
Since 2008, investors have been seeking riskier assets, such as cryptocurrencies, in pursuit of better financial returns.
However, an American academic argues that people are mistaken in considering this currency a safe haven from market volatility and inflation, according to Carol Alexander, a finance professor at the University of Sussex.
Alexander explains that Bitcoin is inherently highly volatile, and its performance at different stages during its short existence has also attracted people.
This is due to the publicity surrounding its massive returns, but as it achieved tremendous growth, it also suffered significant losses.
What are the reasons for the rise in the price of Bitcoin despite doubts about its stability?
The Guardian attributed the recent rise in Bitcoin to what it described as institutional maturity in the cryptocurrency market.
This kind of infrastructure and confidence in the market were not present in previous jumps in prices of currencies like Bitcoin and others.
This occurred despite ongoing doubts about the stability of the cryptocurrency market, especially after the collapse of the FTSE exchange in November 2022.
Ongoing doubts were also reinforced by the trial and conviction of FTSE Exchange founder and CEO Sam Bankman-Fried.
After admitting to federal money laundering violations in the United States, Changpeng Zhao, founder of the world’s largest cryptocurrency exchange “Binance,” faces imprisonment.
High inflation readings from the United States over the past month have also encouraged investors to buy Bitcoin, seeing the cryptocurrency as a hedge against rising prices.
Furthermore, the general surge in technology stocks has prompted investors to consider riskier assets like Bitcoin.