Bitcoin Price Hits All-Time High – How You Can Trade The Cryptocurrency’s Growth Trajectory
In a relatively short time frame, society’s sentiment towards cryptocurrencies seems to be shifting from skeptical to almost celebratory as the versatility of digital currencies has become more apparent, which is reflected in the fact that the price for Bitcoin hit an all-time high recently after the U.S. elections. Furthermore, the recent securitization of Bitcoin and Ethereum has helped legitimize and expand the value proposition of these currencies, turning them into regulated investable assets that individuals and institutions can trade or allocate to within their portfolios. While this rising popularity has gathered the interest of many individuals, it has also made them aware of the price volatility present within the asset class, leading some to wonder about the underlying dynamics of cryptocurrencies and if it is right for them. But others say there is no need to worry – for example, with Plus500’s Crypto offerings, CFD Crypto assets are available to trade with a leverage of 1:2 while Future Crypto assets are available for U.S. traders.
Factors That Influence Cryptocurrency Prices
Though Bitcoin, Ethereum and other cryptocurrencies are digitally native, supply and demand factors still influence their price. Given that Bitcoin’s underlying protocol/coding limits its supply to 21 million coins, fluctuations in demand can lead to price volatility. Mining new Bitcoin is an energy-intensive process that requires the collaboration of various stakeholders within the blockchain ecosystem. Additionally, investor interest, adoption rates and macroeconomic conditions also affect demand.
A seminal factor influencing Bitcoin’s price is ‘Bitcoin Halving,’ which occurs every four years. The last one occurred on April 14th, 2024. In simple terms, Bitcoin Halving reduces the rate at which new coins are created. Thus, it is self-induced scarcity written into Bitcoin’s code. The rationale for these quadrennial halving events is to reduce the supply of Bitcoin entering circulation, thus allowing existing coins to keep their value (i.e., avoid inflation).
Similarly, supply and demand dynamics also influence Ethereum’s pricing; however, the cryptocurrency’s underlying protocols also influence its value. In 2021, Ethereum developers enacted Ethereum Improvement Proposal 1559 (EIP1559), which overhauled Ethereum’s transaction fee mechanism in a …
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