It is a golden period for those invested in Bitcoins. The world’s best-known and most traded cryptocurrency is experiencing a new spring, setting records week by week, indeed hour by hour. The latest wall to collapse is the $70,000 mark: Bitcoin had never reached such peaks in its history. In the last 30 days, crypto has gained over $20,000, and its value has risen by almost 50%; in the last 6 months, the gain has been close to $50,000, with a percentage increase of over 180%.
These staggering figures are sending Nayib Bukele, President of El Salvador, into seventh heaven. In 2021, he went all in on Bitcoin, declaring it legal tender and abandoning the US dollar and gold as currency reserves. At first, it did not seem like a wise choice, as Bukele announced the purchase of one Bitcoin per day by the government a year later, in November 2022, on the brink of one of the most difficult times in the history of crypto.
The best is yet to come
The downturn in the following months was significant, but in hindsight, to date, the investment has paid off with interest, considering the rally of recent times. In short, if the rally continues, El Salvador’s all in could earn it entry into the ‘club’ of the world’s richest countries. This potential economic boost, coupled with the upcoming halving process in mid-April that will reduce the number of Bitcoins in circulation, could pave the way for a prosperous future. The best, optimists would say, is yet to come.
As we know, together with the prospect of a greater scarcity of currency generated precisely by halving, the real boost to prices was given by the green light from the Sec – the US Consob – to Etf’s on Bitcoin spot by the major Wall Street financial houses. The approval of these instruments by reputable institutions like Blackrock, which is reportedly considering adding them to its global allocation fund, is a testament to the growing stability and acceptance of Bitcoin. Bitcoin notched its previous record of $68,982.20 on Nov. 10, 2021, about a year before the catastrophic failure of FTX plagued the crypto industry in what some call crypto’s Lehman Brothers moment.
April is just around the corner
Undeniably, part of this renewed interest in Bitcoin and, more generally, in the entire crypto space is also due to April’s halving of the blockchain validation premium from the 6.25 BTC of the 2020 halving to the future 3.125 BTC. It is difficult, if not impossible, to predict how the market will react. Still, certainly, the path so far has been exhilarating, especially for those who have continued to believe in decentralized finance and blockchain technology during the last two years of deep distrust.
The new record is a triumph for an industry that had long suffered from the reputational and regulatory risk that seemed to be at its worst just two years ago when bankrupt crypto lenders dragged down crypto investors and crypto exchange FTX collapsed. At the end of 2022, as traders tried to gauge the potential extent of the FTX contagion, bitcoin fell to a two-year low. The cryptocurrency fell 64% that year and has been fighting to prove its legitimacy. Some investors remain sceptical about the young crypto asset class, how to value it or whether it has any intrinsic value. And we remain sceptical as well.
