Bitcoin and cryptocurrencies have bounced back over the last week, with the crypto market adding some $600 billion since its January lows as traders brace for a $10 trillion earthquake.
The bitcoin price has come within touching distance of $50,000 per bitcoin for the first time since late December. Meanwhile, ethereum, the second-largest cryptocurrency after bitcoin, is on the cusp of a massive upgrade that some think could turbo-charge the ethereum price.
Now, one bullish bitcoin investor has said fear of missing out (FOMO) and bitcoin’s fundamentals could drive the price over $50,000, while ethereum could be facing a “supply squeeze” that pushes its price higher.
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“Bitcoin is up nearly 25% in the last 10 days, smashing through the $35,000-$45,000 band where it has been lodged since January,” Nigel Green, the chief executive of financial advisory company deVere Group, said in emailed comments.
“It’s now edging nearer to the important $50,000 level. Should it also surge through this key price marker, we expect the current bull run would become supercharged as crypto FOMO would kick in—as it typically does when the bitcoin price shoots up.”
Green also pointed to the “inherent value of digital, borderless, global currencies for trade and commerce purposes in our increasingly digitalised economies in which businesses operate in more than one jurisdiction,” as potentially pushing bitcoin higher.
Russia’s invasion of Ukraine and subsequent sanctions placed on the country have propelled bitcoin into the spotlight over the last few weeks with some santioned individuals reportedly turning to bitcoin and even a Russian official saying the country would be willing to accept bitcoin as payment on international markets.
Elsewhere, trading data suggests institutional investors could be gearing up to enter the bitcoin market.
“This is now becoming clear even to institutional investors—including credit unions, banks, large funds such as mutual or hedge funds, venture capital funds, insurance companies, and pension funds—as well as governments and multinational corporations,” added Green.
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As the bitcoin price nudges $50,000, data shows ethereum could be on the brink of a supply squeeze with the number of new ether, coins that power the ethereum blockchain, coming on to the market falling as more are “burned.”
“After peaking on March 12, the net daily emissions appear to be decreasing as the demand for the network increases,” IntoTheBlock, a blockchain data provider, said in a Telegram broadcast first reported by Coindesk. “Ethereum has not had a deflationary day since February 2, but this might change soon.”
Ethereum is gearing up to a long-awaited migration from proof-of-work, the validation model used by bitcoin, to proof-of-stake—expected to help the network run more efficiently and use less electricity.
The ethereum network began burning coins last year, with more coins sometimes being burnt than are distributed to so-called miners who verify transactions on the blockchain. After the transition to proof-of-stake, expected within months, ethereum holders will instead “stake” their coins to confirm transactions.