1. Will prices continue to rise?
The big question right now is whether cryptocurrency prices can continue to rise. The huge price rise over the past 15 months has some investors wondering if the rally has gone too far, too fast. Others think there may be reasons for investors to remain optimistic, specifically through the lens of bitcoin, currently the largest cryptocurrency by market cap. Historically, bitcoin's performance has helped shape cryptocurrency price trends.
โAs of the latter part of 2023, Fidelity Digital Assetsโ noted that there were 3 factors that could contribute to a tight supply environment for bitcoin in early 2024: the growing percentage of illiquid currencies (over 70% have not moved of a crypto wallet in over a year according to coinmetrics.io, the highest percentage ever recorded), the continued withdrawal of coins from exchanges and, finally, the upcoming Bitcoin halving.โ says Fidelity Digital Assetsโ research director Chris Kuiper.
โThese tight supply conditions have been met with increased demand, particularly due to strong fund flows into bitcoin ETPs,โ Kuiper says. โFidelity Digital Assets believes this could continue throughout the year, and while the past is not necessarily indicative of the future, on-chain metrics (data that can be seen by reading blockchain records) suggest that the bull market is not yet showing signs of abating.โ exhaustion. .โ
Restricting supply and increasing demand can make the price of any asset more likely to rise. However, this is not a guarantee. Investors should remember that even short-term bullish forecasts include the possibility of significant declines, and long-term investors should be prepared to ride out big red days.
