Bitcoin has skyrocketed this week and is now worth more than $57,000, the highest it has been in more than two years — good news for the cryptocurrency world.
The flagship cryptocurrency was up 7.9% on Tuesday morning to about $57,000 and is up nearly 11% from just five days ago. Since the start of the new year, bitcoin has grown more than 28% in value. It is now the highest it has been since December 2021, shortly after it broke its all-time high.
The rally builds upon what was a very solid 2023 for the digital asset space. Over the past year, bitcoin investors have seen gains in excess of 140%, meaning their investments far outpaced traditional assets such as stocks (other than chipmaker Nvidia).
Also this year, bitcoin’s market cap eclipsed $1 trillion for the first time since 2021 and is now over $1.1 trillion, according to CoinMarketCap.
Ethereum, the second-largest cryptocurrency by market cap, was up 8.5% in the past five days to over $3,200. Over the past six months, the price of ether, which is commonly used in online sales of nonfungible tokens, was up some 94%.
With cryptocurrency, it is often somewhat challenging to pinpoint just one reason why prices are rising or falling. Part of the upward pressure being seen right now may be a result of strong investor demand and inflows into bitcoin spot exchange-traded funds.
The Securities and Exchange Commission’s landmark decision to allow bitcoin spot ETFs came in January after years of waiting for cryptocurrency advocates and hope from large institutions such as BlackRock and Fidelity that their applications would get approved. The development was good news for bitcoin and other digital assets, which surged in the months before the decision was made on the hope that they would be approved.
There is also just generally bullish sentiment on cryptocurrency from many investors.
Some of that optimism comes because of something known as “halving.” The bitcoin halving is an event that will take place in a couple months and could be good news for bitcoin and other digital assets in the new year.
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To mine for bitcoin, high-powered computers are used to verify virtual coin transactions. Bitcoin operates on what is known as a blockchain, essentially a public ledger, which contains the history of every transaction. The miners’ computers solve complicated math problems in order to add new blocks to the chain and are, in turn, rewarded with the digital token, making the endeavor profitable.
About every four years, the rewards for bitcoin miners get cut in half, reducing the supply of new bitcoins by 50%. That makes the product a scarcer commodity and tends to raise the price in the following months, often sparking a bull market.
