What factors are pushing Bitcoin to a new all-time high? | Explained

Syllabus: GS-III, Subject: Science and technology, Topic: Emerging technologies, Issue: Crypto-Currency

Reason behind rise in crypto currency price:

  • Market recovery: from geopolitical events like Russia – Ukraine Conflict and cryptocurrency collapses in 2022.
  • Sign of regulatory openness – Approval of the first spot exchange traded funds for Bitcoin by the United States Securities and Exchange Commission.
  • Increase in investor confidence and dominance in digital asset investment.
  • Anticipation of the Bitcoin Halving event in April, is driving investor speculation and price increase.
Prelims Connect (terms in News)

Bitcoin Halving:

·         Bitcoin miners receive rewards for verifying transactions and contributing to the block chain’s growth.

·         Bitcoin Halving occurs approximately every four years, reducing the mining reward by half.

·         The halving ensures a gradual release of coins, maintaining scarcity and preventing inflation.

·         Unlike fiat currencies, Bitcoin’s scarcity is governed by mathematical principles rather than human decisions.

Spot Exchange:

Spot markets trade commodities or other assets for immediate (or very near-term) delivery.

The word “spot” refers to the trade and receipt of the good being made “on the spot”.

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