Cryptocurrency enthusiasts eagerly anticipated positive developments throughout 2023, following the 2022 collapse of FTX, the world’s largest cryptocurrency exchange at the time. Bitcoin, valued just above $16,000 initially, significantly diverged from the $60,000 peak during the 2021 crypto boom.
However, recent months have seen a shift in momentum. Anticipation grew among crypto investors as the SEC hinted at approving a bitcoin exchange-traded fund (ETF), a move expected to drive demand. The confirmation on Jan. 10 that 11 new bitcoin ETFs would commence trading resulted in a 155% surge in bitcoin’s price in 2023.
But what lies ahead? Is this the onset of another crypto bull market, or are enthusiasts overly optimistic? Brian Vendig, president of MJP Wealth Advisors, sees this as a pivotal moment, and experts share their perspectives.
“Expect increased demand and new funds,” says Matthew Sigel of VanEck, citing the convenience of the new ETFs for traditional investors. Sigel predicts that advisors dealing with high net worth clients will soon incorporate crypto into portfolios.
The future may witness more diverse crypto ETFs, potentially linked to secondary cryptocurrencies like ether, according to Todd Rosenbluth, head of research at VettaFI. This opens doors for portfolios combining bitcoin exposure with mainstream investments or alternative strategies hedging against other investments.
Despite bitcoin’s recent surge, Stephane Ouellete, CEO of FRNT Financial, believes it’s premature to label it a full-fledged bull market. Metrics like Google Trends, financing for crypto firms, and trading volumes remain relatively subdued.
Experts caution against buying based solely on the ETF rollout, emphasizing a long-term belief in bitcoin’s potential. Blockchain’s role in the U.S. economic ecosystem and its use as a store of value and alternative payment system in developing countries contribute to this optimism.
Fundamental trading principles
However, caution is advised. Cryptocurrencies lack the fundamental trading principles of stocks, relying heavily on speculative investor activity. Brian Vendig suggests considering the role crypto plays in achieving financial goals when deciding its place in a portfolio, recommending a conservative allocation of 1% to 5%.
In conclusion, while bitcoin’s recent ascent is notable, experts stress the speculative nature of the market and advocate for thoughtful consideration before adding crypto to one’s investment portfolio.
Bitcoin, cryptocurrency, investment, ETF, crypto market, blockchain technology, financial goals, portfolio allocation, market speculation, digital assets, crypto enthusiasts, bull market, SEC approval, trading strategies, alternative investments, market cycle, economic ecosystem, store of value, developing countries.
Want to learn more about bitcoin mining or start mining yourself?
“This data underscores considerably stronger profitability in the mining sector compared to challenges experienced in 2022 and part of 2023.”
In approximately six months, Bitcoin undergo a “halving,” reducing the new bitcoins awarded to miners by half. Satoshi Nakamoto introduced this event in 2009 as an anti-inflationary measure. Occurring roughly every four years, the lead-up to halvings traditionally proves the most profitable time for crypto investors. “Buying bitcoin six months before a halving and selling 18 months after has historically outperformed a ‘buy and hold’ strategy,” affirms the analyst.
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