KEY POINTS
- As Bitcoin’s price edges upward, some analysts believe we’ll see a new high before election day.
- Not only is the economic environment changing, but spot Bitcoin ETFs have also attracted significant sums of money.
- Don’t buy Bitcoin just because the price is going up — research its long-term potential for yourself.
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Bitcoin (BTC) has been on fire recently, sparking speculation that Bitcoin might set a new record. The lead crypto is trading at around $67,500 as I write. That’s not far off its all-time high of $73,734, per CoinGecko data.
Even if it doesn’t rise to new highs, 2024 has been a year of relative stability for the granddaddy of crypto. Don’t get me wrong, it’s still volatile. It’s just less volatile than in previous years. That, along with rising prices, may make you wonder if it’s a good time to buy Bitcoin from a top-rated place.
Let’s have a look at what’s been powering the recent surge and what it all means for investors.
Is Bitcoin heading for a new high?
Analysts at Standard Chartered and Bernstein Research are optimistic that Bitcoin will continue its upward momentum in the coming weeks, according to Decrypt. The two main reasons are increasing inflows of institutional money and pre-election headwinds.
1. Influx of institutional cash
The SEC’s approval of spot Bitcoin ETFs earlier this year made it easier for institutions to get exposure to crypto. In total, spot Bitcoin ETFs now hold over $65 billion in assets, according to data from SoSoValue. Bitcoin’s surging price has pushed the value of the funds upwards. On top of which, we’ve seen high inflows of money — lots of people are buying.
More widely, the economic environment is shifting in favor of crypto. High rates have made investors cautious in recent years. As the Fed starts to ease the economic brakes, riskier assets like cryptocurrency become more appealing. The combination of institutional money and increased confidence is a potent mix for Bitcoin.
Institutional investors aren’t the only ones who can access crypto more easily through ETFs. Crypto brokers like Robinhood offer a couple of ways to get exposure to crypto. You can buy cryptocurrency directly. You can also add Bitcoin and Ethereum ETFs to your investment portfolio.
2. Election day is approaching
Regardless of who wins the presidency, the election itself has an impact on crypto prices. Research from QCP Capital shows that Bitcoin’s price rose in the run-up to the 2016 and 2020 elections. It argues that Bitcoin soared in the three weeks before election day — which is what we’re seeing again this year.
BlackRock CEO Larry Fink says it doesn’t matter who wins the election. Fink believes liquidity and transparency will be the key drivers to increased adoption. BlackRock’s spot Bitcoin ETF has more assets under management than any of the others.
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Is it a good time to buy Bitcoin?
We’ve witnessed a number of these bullish cycles in Bitcoin’s history. As a result, I’m cautious about buying when it’s close to a new high. I’m not an advocate of trying to time the market either. If you believe in Bitcoin’s long-term potential, in 10 years, today’s fluctuations are unlikely to have much of an impact on the value of your holdings.
However, be prepared. Bitcoin’s price can be a rollercoaster ride and it may drop right after you buy. Not only that, but cryptocurrency prices are overly susceptible to FOMO (fear of missing out) — people see the prices rising and worry that they might miss out. This can lead to panic investment decisions which people often regret afterwards.
If you want to buy Bitcoin because you’re scared you’ll miss the boat, take a beat. Be clear on why you’re buying and how it fits with your wider investment strategy.
- Look at how you think Bitcoin might perform in the long term. Optimists argue it’s the digital currency of the future and will take a chunk out of the international money transfer market. Skeptics believe it’s a bubble that will fall to zero.
- Make sure you understand the risks. Cryptocurrency is a relatively new and unregulated asset and there is a lot we don’t know about how it will unfold. Only invest money you can afford to lose and make sure crypto is only a small part of a more diverse portfolio.
Bottom line
It’s never been easier to add Bitcoin to your portfolio. You can buy from the best crypto exchanges and brokerages. You can also buy spot Bitcoin and Ethereum ETFs just as you would other ETFs and securities.
But don’t buy because it’s easy or because the price is rising. If you buy Bitcoin or any other investment, do it because it fits your portfolio and you believe it will outperform alternatives over time.
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