Cryptocurrency: Why is it on the Rise?
Following record-high market valuations and sharp price declines in 2021, cryptocurrency has gotten a lot of attention. Celebrities’ endorsements and Twitter mentions helped drive up cryptocurrency values during March, April, and May. When China’s central bank, the People’s Bank of China, decided to outlaw digital currencies by declaring all transactions unlawful essentially, it triggered a massive fall.
However, given the history of volatility in the crypto market, this Rise does not imply a long-term trend reversal. Both the price of Bitcoin and the rate at which it rises are equally plausible outcomes. According to analysts, long-term crypto investors will have to live with the price fluctuations for the foreseeable future. Visit cryptocurrencies for the most up-to-date information.
Why Investors Need to Read This
If you’re a cryptocurrency investor, be prepared for further volatility. Expert Humphrey Yang, who runs Humphrey Talks, recently told NextAdvisor that these investments are “extremely volatile,” with some days seeing a drop of as much as 80%. As a result, experts advise that you limit your crypto holdings to no more than 5% of your whole portfolio. “However, if you have faith in [Bitcoin’s] long-term prospects, you should avoid checking on it.” That’s your best option.”
Don’t let a quick spike in the price affect your long-term investing plan to be on the safe side. Another thing to keep in mind: Don’t acquire additional crypto when it’s cheaper to hold your current stash. Preferably, before investing any more funds in a speculative asset such as Bitcoin, make sure that all of the financial bases are covered — from pension plans to cash reserves in case of emergencies.
Bitcoin’s most recent significant increase is likewise nothing new. Invest Diva CEO Kiana Danial believes that while Bitcoin’s price has gone up in the long run, there has been a lot of turbulence along the way. Like Danial, who claims she’s not “jumping on the hype,” investors should keep onto their investments and not be concerned about price swings. It doesn’t matter if cryptocurrency prices are rising or falling; the best thing you can do is ignore it. Set it and forget it, just as with any other long-term investing account you may have at this point. Says Yang: “Letting your emotions take over might lead to selling at the wrong moment or leading to a bad judgment.”
What’s driving the cryptocurrency market upward right now?
In the last 24 hours, the crypto market had gained 1.85% at the time of writing (12.30 pm, 30 September 2021). Crypto miners are taking measures to reduce their environmental effects, despite some obstacles. Additionally, the number of environmentally friendly cryptocurrencies has risen recently, attracting traders concerned about the environment. As greener alternatives to the more established, more significant tokens on the market, digital currencies like Cardano and XRP have emerged. The first nation to embrace Bitcoin as legal money, El Salvador gives out $30 (£22) in Bitcoin to everyone who installs a government-issued digital wallet software.
- Sentimental Change
There is an ever-growing cast of characters in the cryptocurrency industry, and their voices can impact price movements. Bullish rumors have recently boosted investor confidence. Consider the case of Tesla CEO Elon Musk. When Elon Musk announced in March that Tesla Inc. would accept Bitcoin payment for its electric automobiles, the billionaire turned heads — and helped drive prices up and then down — before reversing course in May. He changed course because he was concerned for the environment, citing bitcoin mining’s use of fossil fuels as a reason. In the week after those remarks, Bitcoin’s value dropped by approximately a fourth.
However, there’s a new twist in town: Musk has taken a more encouraging stance in recent weeks. Towards the end of July, he stated that he had Bitcoin, Ethereum, and Dogecoin in his possession and wanted to see the cryptocurrency market thrive. One other well-known and respected voice in this arena is Cathie Wood, a famous financial manager. In May, she told Bloomberg TV that she expected Bitcoin to hit $500,000 in value. She is a well-known crypto bull. According to a recent interview, she believes businesses should look about include Bitcoin in their financial statements.
- Signals of Hash Rate
Until about a month ago, the only news coming out of the cryptocurrency sector was China’s crackdown on the currency. The sudden shutdown of millions of machines processing cryptocurrency transactions due to a restriction on Bitcoin mining was devastating. Computing power utilized in mining and processing decreased by half in just two and a half weeks as computers went offline.
Additionally, China’s aggressiveness showed that the decentralized currency is still subject to government control, which harmed morale. One of China’s first Bitcoin billionaires, Bobby Lee, predicted that the country’s anti-cryptocurrency crackdown would worsen and eventually lead to a total ban on cryptocurrency ownership. Uncertainty was further exacerbated in the United States by a recent legislative debate over encryption regulations. However, statistics from Blockchain.com show that the hash rate has recovered and is now higher than it was in July. The market’s faith in the potential of cryptocurrencies has been restored, despite the resistance they face from governments across the world.
- Observe What Happens at Jackson Hole
It may throw a wrench in attempts to end the current monetary strategy that has brought the country to its knees in debt. When interest rates are to rise, the price of cryptocurrencies, like gold, will drop. Since its inception, the Kansas City Federal Reserve annual meeting has been closely watching for any indications of impending policy changes. This year’s conference will be electronically once more. Others, such as Powell, have used it as a platform to discuss new efforts, such as the Fed’s shift to zero-interest rates.