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Why is Bitcoin going up? Should I buy in the UK now?

Is Bitcoin a Good Investment?

Bitcoin has witnessed a dramatic ascent, breaking the $60,000 barrier for the first time in over two years.

This resurgence in value marks a significant milestone for the world’s pioneer cryptocurrency, reflecting a bullish momentum that has seen its value soar by more than 42% since the onset of 2024, including a 6% increase in a mere 24-hour window.

Such a rally has effectively wiped out the losses incurred during the previous downturn in the crypto market, propelling Bitcoin towards potentially surpassing its historical peak of $64,000.

Simultaneously, Ethereum, the second most valued cryptocurrency, has experienced its own set of gains, albeit at a slightly more moderate pace.

Ethereum’s price elevation of almost 3% in the last day has pushed it above the $3,300 mark, inching closer to its former zenith.

See also: How to buy Ethereum in the UK

Why has Bitcoin gone up?

In a nutshell, Bitcoin’s recent price surge is attributed to investor optimism following the U.S. Securities and Exchange Commission’s approval of 11 spot Bitcoin exchange-traded funds (ETFs), alongside anticipation of the Federal Reserve potentially lowering interest rates. Additionally, the upcoming Bitcoin ‘halving’ event in 2024, which reduces the reward for mining and thereby decreases the rate at which new Bitcoins are created, is expected to increase the asset’s scarcity and drive up its price.

The resurgence of Bitcoin can be largely attributed to the burgeoning confidence amongst cryptocurrency investors, ignited by the U.S. Securities and Exchange Commission’s green light to 11 Bitcoin spot exchange-traded funds (ETFs) earlier this year.

See also: Bitcoin ETFs: Can you invest in the UK?

This pivotal regulatory approval catalysed an influx of over half a billion dollars into Bitcoin ETFs in a single day, underscoring the heightened appetite for cryptocurrency investments.

These spot Bitcoin ETFs, distinct from their futures-based counterparts, facilitate the direct trading of Bitcoin at prevailing market prices. Their introduction has played a crucial role in fueling Bitcoin’s price escalation, marking a significant uptrend since its inception.

Despite this positive trajectory, the specter of a potential market correction looms, spurred by Bitcoin’s notorious price volatility and the tumultuous events that have previously rattled the cryptocurrency ecosystem.

These include regulatory crackdowns and the collapse of key industry players, which have historically led to dramatic price swings.

Amid this renewed enthusiasm, the trading volume and interest in Bitcoin ETFs have surged, surpassing traditional investment vehicles in daily trades.

Bitcoin Halving

The Bitcoin halving is an event that occurs approximately every four years, which halves the reward given to miners for processing transactions and adding them to the blockchain. This mechanism reduces the rate at which new bitcoins are created, aiming to control inflation and increase scarcity over time, ultimately influencing the cryptocurrency’s value.

This shift signals a growing confidence in Bitcoin’s long-term value proposition, particularly in anticipation of the Bitcoin halving event—a critical occurrence that historically influences Bitcoin’s price dynamics.

The market’s current vibrancy is further buoyed by speculation around the approval of Ether ETFs, suggesting a broader recognition of cryptocurrency’s evolving landscape.

However, experts caution that the market may still be underestimating the impact of the forthcoming Bitcoin halving, hinting at the possibility of market adjustments ahead.

As Bitcoin and Ethereum edge closer to their historic highs, the crypto market stands at a crossroads, encapsulated by optimism and caution.

The unfolding narrative of Bitcoin’s rally underscores a complex interplay of regulatory advancements, market sentiment, and the intrinsic volatility of the crypto world.

As investors navigate this terrain, the future of Bitcoin remains a subject of keen speculation and intrigue, promising a blend of opportunities and challenges in the evolving digital asset landscape.

Should I buy Bitcoin now?

Deciding to buy Bitcoin depends on your financial situation, risk tolerance, and investment strategy. It’s important to research thoroughly, consider the market’s volatility, and potentially seek financial advice, as cryptocurrency investments carry significant risks. Only invest what you can afford to lose.

Here are key points to consider:

  1. Market Volatility: Cryptocurrencies, including Bitcoin, are known for their price volatility. Prices can fluctuate widely in short periods, which could potentially lead to significant gains or losses.
  2. Regulatory Environment: The UK’s regulatory stance on cryptocurrencies is evolving, which could impact the future use and value of Bitcoin. Stay informed about any changes in legislation that could affect your investment.
  3. Investment Goals: Consider your investment goals, risk tolerance, and time horizon. Bitcoin might be suitable for those willing to accept the risk of loss for the potential of high returns over a long period.
  4. Diversification: As with any investment, consider diversifying your portfolio to spread risk. Relying solely on Bitcoin or any single asset is riskier than having a diversified investment portfolio.
  5. Research: Stay informed about the latest market trends, news, and analyses. The more informed you are, the better decisions you can make.

You can invest in Bitcoin through one of our reviewed crypto exchanges in the UK.

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Don’t invest unless you’re prepared to lose all the money you invest.

Don’t invest unless you’re prepared to lose all the money you invest. When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in. Tax treatment depends on your individual circumstances and may be subject to future change. The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice.

Will Fenton is the founder of Sterling Savvy. He is a personal finance expert and writes about trading, investing, budgeting, and other financial topics.

Along with his education in Economics & Finance, he has experience working in the financial services industry in London working for one of the UK’s leading financial companies, “a trustworthy and respected provider of news, education and market analysis for the everyday investor”.

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