Why Bitcoin's Price Keeps Rising?
Energy-Intensive Mining and Finite Supply
$BTC Bitcoin is mined using an energy-intensive "proof of work" (PoW) method that requires powerful ASIC (application-specific integrated circuit) miners. Every four years, this process becomes more challenging through a "halving," which cuts the mining rewards in half. With a finite supply, the last Bitcoin token is expected to be mined by 2140. These qualities make Bitcoin more akin to precious metals like gold or silver, unlike tokens minted through the less energy-intensive "proof of stake" (PoS) method.
SEC Recognition as a Commodity
This solid foundation led the U.S. Securities and Exchange Commission (SEC) to classify Bitcoin as the only cryptocurrency recognized as a commodity, not a security. This distinction also supported the SEC’s approval of the first spot price Bitcoin ETFs, ahead of Ethereum, which switched from PoW to PoS two years ago.
Historical Price Swings and the Halving Effect
Bitcoin's price has seen significant volatility in recent years. In 2020, its price surged 322%, driven by stimulus checks, social media buzz, and the rise of crypto trading platforms. The third halving in May 2020 further restricted supply, fueling another 47% price increase in 2021.
However, 2022 saw a 48% price drop as rising interest rates pushed investors toward safer assets, leading to a "crypto winter." Despite this, Bitcoin regained its footing in 2023, rising 31% as interest rates stabilized.
2024's Rally: Halving and Spot ETF Approvals
The upward trend has continued in 2024, with Bitcoin gaining 44% year-to-date. Key drivers of this rally include the approval of spot price ETFs in January, the fourth halving in April, and growing expectations for interest rate cuts.
Bitcoin's unique attributes, regulatory recognition, and cyclical halvings continue to fuel its rise, making it a standout in the cryptocurrency market.
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