Navigating the Future: Can Bitcoin Thrive in 2024?
Introduction
Bitcoin. A name that either scares or excites investors. This is a decentralized digital currency that operates on a blockchain, a secure and transparent public ledger for recording transactions. Users can conduct direct transactions without the need for intermediaries like banks. The process of mining involves powerful computers solving complex puzzles to both create new Bitcoins and validate transactions. Since its release in 2010, its price has crashed and surged several times.
Recent changes
Looking at 2023, Bitcoin’s price has risen from $16,605 to around $42,150. This represents a tremendous 153% increase, and it has been doing well at the start of 2024. Not only that, but recently spot bitcoin ETFs have been approved as well. This may seem like a success, however, the cryptocurrency has yet to see any tangible growth from this. Its price is down 10% since the ETFs started trading.
The vetted acceptance it has received from Wall Street investors has done little in terms of returns, as investors are just moving money around in crypto rather than investing more in it.
The Great Halving
However, this is not the biggest event for Bitcoin this year. Bitcoin halving is an event where the reward for Bitcoin mining is halved every 4 years to counteract the inflation of Bitcoin by maintaining a short supply. This cuts the rate at which new coins are released into circulation. In theory. reduction in the supply of bitcoins increases the price despite no changes in demand, thus maximizing returns.
Historically, this event has caused the price of Bitcoin to skyrocket. There are debates as to whether this was caused by these halvings or not, however, there is still a high probability such a price increase will happen again after this year, thus improving the outlook for bitcoin. Falling interest rates and the fear of a US banking crisis could make it an attractive investment.
Challenges
That being said, there are still challenges that Bitcoin must overcome. Even though Bitcoin may become more stable due to the “buy-and-hold” strategy that has become associated with it, it is still a volatile investment. The overall hostility of governments toward cryptocurrency could be a problem as well. For instance, a bill has been recently introduced in the United States to impose strict requirements on all cryptocurrency mining and operations. These attitudes could have even further impacts in the future.
Bitcoin’s environmental fallout is also another growing concern. During the process of Bitcoin mining, the cryptocurrency decided to use the proof-of-work(POW) system to validate and add new coins to the Blockchain. This is done once the miners have solved the required cryptographic puzzles that constitute the mining process. The algorithms behind the POW system generate 65.4 megatonnes of Carbon Dioxide, which are the country-level emissions of Greece. This makes it less attractive to investors who are mindful of such impacts.
Final takeaways
All things considered, most investors still have a bullish outlook on Bitcoin. The market has been treating it more like a stock, thus there is less probability of the outrageous price drops in the past. As the currency is completing its transition from a niche investment to a mainstream cryptocurrency, it continues to become more appealing to investors across the globe. However, investing in Bitcoin is still somewhat risky due to the constantly changing environment of Bitcoin mining, in addition to supply and demand. Thus, this cryptocurrency is better for more experienced momentum investors, rather than those who just want a stable return. It remains a volatile investment but can pay off for investors who can effectively assess risks.
Sources
https://www.investopedia.com/articles/forex/121815/bitcoins-price-history.asp
https://www.fool.com/investing/2024/02/11/will-bitcoin-reach-100000-in-2024/
https://www.forbes.com/advisor/investing/cryptocurrency/bitcoin-price-prediction-2024/
https://www.forbes.com/advisor/investing/cryptocurrency/what-is-bitcoin/
https://www.forbes.com/advisor/in/investing/cryptocurrency/bitcoin-halving/
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