Bitcoin has once again surged past the Rs 50 lakh mark, marking a significant milestone in its volatile journey. This remarkable rise can be attributed to two main factors.
Firstly, Bitcoin is on the verge of reaching its previous all-time high of $60,000, with its value crossing Rs 50 lakh in Indian rupees. Bitcoin, being the pioneer cryptocurrency, gained widespread popularity during the COVID-19 pandemic in 2020, as investors sought alternative assets amidst economic uncertainties.
The surge in interest led to a surge in investments, even among small investors using mobile apps.
Although Bitcoin reached a new peak of $69,000 in November 2021, it subsequently experienced a gradual decline, plummeting to $16,000 in January 2023.
In India, the imposition of a 30% tax on cryptocurrency income dampened investor enthusiasm.
However, in recent months, Bitcoin has witnessed a gradual resurgence, posting a staggering 48% increase in February alone. Its price has surpassed $60,000 and is approaching its previous peak. Over the last 15 months, Bitcoin's value has surged by approximately 300%.
Arjun Vijay, co-founder of Geotas, attributes this surge to two key factors. Firstly, Bitcoin Halving, a process that reduces the production of new bitcoins by half every four years, thereby reducing supply.
The next Bitcoin Halving is scheduled for April, further reducing Bitcoin's supply.
Secondly, the US's official approval of Bitcoin investment through Exchange-Traded Funds (ETFs) has attracted investments from renowned companies like BlackRock and Fidelity, making Bitcoin accessible to a wider range of investors.
Currently, ETFs are attracting investments equivalent to 10,000 bitcoins daily, surpassing the number of new bitcoins being produced by more than tenfold.
Vijay predicts that this demand will increase twentyfold post the Bitcoin Halving in May, driving up Bitcoin's value.
However, despite Bitcoin's resurgence, its future trajectory remains uncertain.
Investors are advised to exercise caution and carefully evaluate the risks before making significant investments in Bitcoin.
