Following records on December 5, the cryptocurrency is trading at 43,921 dollars. On December 6, one bitcoin could be purchased for 43,866 dollars.
What is Bitcoin and how does it work?
Bitcoin, often called a token or cueball in slang, is the first cryptocurrency worldwide. It emerged in 2008 through the collaboration of Satoshi Nakamoto and Hal Finney. Bitcoin draws interest from professional investors and everyday people alike, including office workers, students, laborers, and the unemployed. Many hope to grow wealthy as the price of cryptocurrency frequently surges, as it does now. With a portfolio that includes several Bitcoins, a user may capitalize on favorable moves and, in theory, purchase a home in a major city like Moscow if conditions align.
Bitcoin is an electronic payment system that uses digital coins as a medium of exchange. Traditional payment systems such as Mir enable electronic payments using fiat currency, in this case rubles. The core idea is that Bitcoin exists purely in the digital realm and transactions are largely anonymous. The currency is not tied to any central bank or government, and its value is largely driven by demand in the market.
Bitcoin operates on a blockchain. This system records every sale and purchase in a continuous chain of blocks. When a digital signature is confirmed, a block is closed and a new one is created. In essence, each transaction adds a new page to a growing ledger, and the pages together form a book-like sequence called a blockchain.
To register a new transaction, the system must reference all prior blocks, ensuring that the blockchain remains an open and immutable database accessible to users of the platform. Bitcoin mining, the process of creating new tokens, relies on computer hardware such as processors and specialized equipment. In the early days, a regular computer could mine Bitcoin, but today a mining farm with many graphics cards and ASIC devices is typically required, with equipment costs running into thousands of dollars.
The main driver behind Bitcoin’s current high price is investor expectations.
Analysts say the crypto market anticipates regulatory moves, particularly the potential approval of Bitcoin exchange-traded funds (ETFs) in the United States. If spot trading gains approval, demand for Bitcoin and other established currencies like Ether could rise, potentially pushing prices higher. Market watchers caution that the current rally may reflect expectations rather than solid fundamentals, with some predicting volatility ahead.
Another factor cited is the approaching Bitcoin halving, a built-in mechanism that reduces the rate of new coin creation and caps the total supply at 21 million. Historically, halvings have coincided with price movements, though outcomes vary with market sentiment.
How much will Bitcoin’s price increase?
Industry voices note skepticism within the Russian crypto community about the sustainability of recent gains. Some argue that the rise stems from regulatory developments rather than underlying market strength, and there is concern that negative signals from global markets could trigger a pullback. Predictions vary, with some analysts suggesting new highs may stall near certain thresholds, while others expect more modest gains as the halving approaches.
Vladislav Antonov, a BitRiver analyst, suggests Bitcoin could see continued price pressure in the near term, potentially hovering around the mid-40s to mid-50s thousands of dollars. If demand remains high, prices might push higher, but a shift to a sideways trend could help investors prepare for the halving in 2024. A break above the 46,000 to 52,000 range could open the path to higher levels, though momentum can reverse quickly if demand cools.
Rapid price increases carry risks. Investors may choose to take profits, leading to a sudden drop in prices. The timing of regulatory approvals for ETFs could play a pivotal role in future price movements, as large holders assess the opportunity to realize gains after sizable year-to-date increases. Market participants should weigh the potential gains against possible declines before making decisions.
Yuri Pripachkin, president of a Russian cryptoeconomics and blockchain association, forecasts a price around 50,000 dollars in December, reflecting optimism among some market participants.
When to buy Bitcoin?
Seasonal trends in the fourth quarter often see price movements that can exceed those in January. This has led some to consider selling to lock in profits rather than buying at elevated prices. Analysts advise watching for price dips, particularly declines of around 20%, as potential entry points. Some experts believe buying in small amounts now is a prudent strategy, given ongoing volatility.
Cognition from finance educators suggests spreading purchases over time can help mitigate risk. If a price dip occurs at the start of a new year, staggered buying may be advantageous, enabling savers to deploy funds incrementally. Overall, the key is careful risk assessment and measured investment planning.
In any case, thoughtful consideration of risk and reward remains essential before making any investment moves.
Sources are cited for context and attribution. [Source: crypto market analyses and industry commentary].