Hoping Bitcoin Price to Rise? Be Careful There Are Risks!

Bitcoin, the largest digital asset by market cap. (Photo; Doc. Unsplash)

JAKARTA - Bitcoin (BTC), as the world's largest digital currency based on market capitalization, is now facing challenges as the market begins to open its eyes to a new reality regarding this asset class.

Bloomberg Intelligence Senior Strategist, Mike McGlone, provides his views on the risks facing Bitcoin. He pointed out that the assumption that “Price will Go Up, and Keep Going Up” for Bitcoin could be putting the main cryptocurrency under undue pressure.

As its popularity continues to grow, McGlone notes that there are lessons to be learned from high-performance assets that many people have been highlighting. This lesson teaches that the risk of price reversal can be even greater in the cryptocurrency world because it involves many members of the public.

Bitcoin has become a favorite choice for various investors, including institutions and individuals. The hype around this digital currency increased especially when its value approached the All-Time High (ATH) above 69,000 US dollars or around IDR 900 million in November 2021. Even though its performance has decreased since then, expectations of continued increase in value lead many to believe that the market will continue the bullish trend towards new levels.

McGlone compared Bitcoin's performance to that of e-commerce giant Amazon's stock, which has managed to grow about 130 times in about 25 years. According to him, even if the Bitcoin price consolidation continues, the coin has the potential to maintain its performance.

The strategist also notes that Bitcoin will still prove profitable even if the price drops to the $10,000 level in the near future.

Not apart from ETFs

Bitcoin is known as the most decentralized cryptocurrency, not regulated by a centralized entity like banks. Even so, the future of Bitcoin largely depends on the number of products that surround it, including spot Exchange Traded Funds (ETFs). Many anticipate that such a product will get approval from the US Securities and Exchange Commission (SEC).

While companies like BlackRock and Fidelity Investments are vying for approval for their spot BTC ETFs, there are still many similar proposals pending SEC decisions. If this product is approved, experts predict that this step could be significant in reviving the price of the digital currency.