The Bitcoin price is hugely volatile, and nobody knows where it will go from day to the next. Diehard crypto fans believe the alt-coin will one day fly “to the moon” and be worth hundreds of thousands of dollars. Others are more sceptical.
Either way, it’s an incredibly risky investment, and most people should stand clear. Some have made fortunes from crypto, but many more will have lost out.
Bitcoin was launched in 2009 by a secretive hacker called Satoshi Nakamoto, who many claim does not exist because he has never revealed himself.
As a digital cryptocurrency built on blockchain technology, it’s a completely new form of virtual money, untethered to any government or financial institution.
This means investors have no redress if they lose their money, as many have due to fraud, theft or throwing away a laptop with coins stored on the hard drive.
The authorities treat crypto with suspicion, as criminals use it for extortion and money laundering. Yet it refuses to die.
The Bitcoin price, which is largely driven by investor sentiment, and peaked at $66,000 in October 2022.
It then crashed to $16,500 at the start of 2023, before staging a remarkable recovery.
The price is up 120 percent over 12 months to $48,022 at time of writing, boosted by a $6,000 surge in recent days.
Two key events in 2024 look set to drive Bitcoin to new highs.
In January, Wall Street regulator the Securities & Exchange Commission granted approval for US-based exchange traded funds (ETFs) investing in Bitcoin.
ETFs have given US private investors and institutions a relatively safe way to invest in the alt-coin.
Nine different ETFs now track the crypto spot price, which means US investors don’t have to buy the actual coins and worry about losing them in cyberspace.
Ironically, the Bitcoin price crashed on the news as investors banked profits in a classic case of “buy the rumour, sell the fact”.
Now it’s flying again.
Victoria Scholar, head of investment at Interactive Investor, said Bitcoin “has been on a tear” after rallying almost 10 percent in just five trading days. “It’s now on track for its longest winning streak in 11 months.”
Bloomberg figures show investors have already poured more than $9billion into Bitcoin ETFs.
The US stock market then hit a record high on Friday and Scholar says this also “has boosted risk appetite generally and demand for crypto”.
The second big 2024 event expected to boost Bitcoin is the “halving” in April, which will halve the reward for “mining” new coins, tightening supply and potentially beefing up the price.
Bitcoin will go through a halving every four years until the last, lonely Bitcoin is finally mined in 2140.
Bloomberg has predicted that Bitcoin will $50,000 this year. We’re almost there and it’s only February.
Standard Chartered said it would hit $100,000 in 2024. RJ Fulton, a writer at the US Motley Fool stocks and shares website, shares this view.
He says a six-figure Bitcoin is “almost a near certainty”. “As the rate of supply diminishes, Bitcoin’s price can soar even if demand stays constant.”
In previous years when a halving took place, Bitcoin’s price grew around 125 percent on average. If repeated, that “would put Bitcoin just shy of the six-figure mark at $99,000″, Fulton said.
Others expect even more excitement. Matrixport predicts a year-end price $125,000 while BitQuant said it could hit $250,000.
Joshua Mahony, chief market analyst at Scope Markets, said traders are hoping for a bumper 2024 after the halving.
He said recent US dollar strength has acted as a “short-term headwind” but Bitcoin should take off when US interest rates are cut.
It’s going to be another crazy year for crypto and most people should stand well back. Traders must understand the risks and only invest money they can afford to lose. Talk of Bitcoin hitting $100,000 is pure speculation but as we’ve seen before, with crypto anything can happen.