The world’s most well known cryptocurrency, Bitcoin, last week touched an all time high of over $67,000. The bellwether cryptocurrency, which came into existence eight years ago in 2013, has risen by nearly 400% in the last one year, from over $13,000 in October 2020 to $67,000 this month. Crypto experts, however, warn that people should not look at them as some kind of get-rich-quick schemes as they are volatile like any other asset class.
Bitcoin (BTC) has risen from over $43,700 at the start of the month to over $63,000 on Tuesday. It was at around the same level on April 15 this year but later fell to below $30,000 in July this year but started to rise again by the end of the month.
There are several reasons behind the meteoric rise of Bitcoin’s valuation. Some leading celebrities including Tesla founder Elon Musk have backed cryptocurrencies as Tesla also accepts payments for its famed electric cars in cryptocurrency.
Secondly, the latest bull-run is backed by the listing of the first exchange traded fund (ETF) that is based on Bitcoin futures. ProShares Bitcoin Strategy ETF (BITO) listed on the New York Stock Exchange on October 19 recorded a trading volume of over $900 million. It became the second most traded ETF on the first trading day after BlackRock’s Carbon fund. It also became the first fund to have more than $1 billion assets under management (AUM) within two days of the launch.
Nischal Shetty, Founder of cryptocurrency exchange WazirX, says the price rise of Bitcoin and altcoins is closely tied to the increasing trading volume of crypto in spot as well as futures markets around the world.
Shetty said the high volume trading has activated the bulls leading to Bitcoin and Ether reaching their new all time highs.
“It also shows that investors are bullish on this asset. All in all, it is a good sign for Bitcoin because it will now encourage more investors to take it seriously as an alternative asset class, and participate,” Shetty told ETV Bharat.
He, however, has a word of caution for Indian investors.
Shetty says though the market looks bullish, it is important to not get greedy and think of crypto as a get-rich-quick scheme.
“Price rise and corrections are a part of every market cycle, and it’s important to invest prudently based on your risk appetite,” Shetty said, adding that investors should not act on the fear of being missed out (FOMO) factor alone.
“You do your own research before investing in any crypto-asset. If you are a long-term investor, it’s definitely a good idea to dollar-cost-average your investments,” he said.
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