What’s Behind the Bitcoin Rally?: The Kiplinger Letter
After tumbling in 2022, there was a Bitcoin rally last year. It doubled in 2023, with other forms of cryptocurrency rising even more.
To help you understand what is going on with the recent Bitcoin rally that started in late 2023, the world of digital tokens and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…
If you think stocks have been on a tear, just look at the market for cryptocurrency, where prices soared at dizzying rates last year. What’s behind this rally, and can it continue?
Start with Bitcoin. It’s up 69% recently, thanks to a rally that began in early October. After tumbling in 2022, the best-known digital token doubled last year. Less familiar Bitcoin alternatives rose even more. Shares in one crypto company, Coinbase Global (COIN), shot up a staggering 391% in 2023.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Speculators are betting on new Bitcoin funds that could launch soon. Financial regulators are due to decide whether to allow several Bitcoin ETFs, exchange-traded funds, that would give investors much easier access to Bitcoin via their brokerages. BlackRock, Fidelity, Wisdom Tree and Invesco are some of the sponsors hoping to launch such ETFs.
The supply of new Bitcoin is also due to slow thanks to an upcoming “halving.” Every four years, the algorithm that governs Bitcoin (BTC/USD) cuts the amount “miners” get paid to unlock new coins by half. The energy-intensive computing power miners need to solve the increasingly complex computing problems that unlock new Bitcoin could become too costly. Previous halvings led to big jumps in the currency’s price.
There’s also hope that cryptocurrency is shaking off its sketchy image. The frauds perpetrated by one-time crypto kingpin Sam Bankman-Fried showed the ugly side of crypto as a potential medium for ripping off naïve investors. His recent prosecution, plus other legal actions against bad actors in the industry, could renew public trust.
Clearly, more people are buying and selling various digital coins. The number of accounts that can receive crypto has doubled over the past two years, to 15 million. And more investors with deep pockets are getting involved. Venture capital flowing into the market hit $11 billion last year and is expected to increase in 2024.
And yet, there are plenty of reasons to be wary. Cryptocurrency is famous for booms and busts. Prices peaked in 2021, crashed in 2022, and soared again in 2023 but haven’t regained their former tops. Plenty of money has been lost on that wild ride.
Most crypto is still used for speculation, not as a medium of exchange, which was its original purpose. Few people buy things with crypto, and few businesses accept it as a payment option. For most users, it’s more like digital gold, a new asset that offers an alternative to traditional investments and the hope of getting rich fast.
Yet, scams still abound, and regulation remains patchy at best. In the U.S., crypto is generally regulated under existing regulations for other products and commodities. There is no overarching, crypto-specific set of rules to create a level playing field and give investors the confidence that they truly understand how the market works.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
Related Content
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
Rodrigo Sermeño covers the financial services, housing, small business, and cryptocurrency industries for The Kiplinger Letter. Before joining Kiplinger in 2014, he worked for several think tanks and non-profit organizations in Washington, D.C., including the New America Foundation, the Streit Council, and the Arca Foundation. Rodrigo graduated from George Mason University with a bachelor's degree in international affairs. He also holds a master's in public policy from George Mason University's Schar School of Policy and Government.
-
How to Help Your Kids Without Ruining Your Retirement
Here are some general considerations to ensure the gift of assets to your kids will not negatively affect your financial future.
By Mario Hernandez Published
-
AI to Power the Next Generation of Robots
The Kiplinger Letter There's increasing buzz that the tech behind ChatGPT will make future industrial and humanoid robots far more capable.
By John Miley Published
-
A Spotlight on the Pacific States: The Kiplinger Letter
The Kiplinger Letter Most Pacific states are seeing good job growth in multiple sectors including tourism, hospitality, and construction.
By David Payne Published
-
The Robots Are Coming... But Not For a While
The Kiplinger Letter There’s excitement in the tech sector over the potential of humanoid robots, but widespread adoption is likely to be years away.
By John Miley Published
-
Farmers Face Another Tough Year As Costs Continue to Climb: The Kiplinger Letter
The Kiplinger Letter Farm income is expected to decline for a second year, while costs continue to up-end farm profitability.
By Matthew Housiaux Published
-
A Spotlight on the Mountain States: The Kiplinger Letter
The Kiplinger Letter Most Mountain states are seeing good job growth in multiple sectors from healthcare, energy, and semiconductor production to farming and government.
By David Payne Last updated
-
A Spotlight on the Plains States: The Kiplinger Letter
The Kiplinger Letter The labor market is tight in the Plains states and outside of healthcare and construction most sectors are flat or down.
By David Payne Published
-
Kiplinger's Commodities Forecast
The Kiplinger Letter Following a rocky few years for markets, we expect commodities to be less volatile in 2024, as a post-pandemic normal finally emerges.
By Matthew Housiaux Published
-
Growth Stalls in China As Property Market Continues to Struggle: The Kiplinger Letter
The Kiplinger Letter The property market remains a major drag on Chinese growth, with sales now 50% below their peak.
By Rodrigo Sermeño Published
-
A Spotlight on the South Central States: The Kiplinger Letter
The Kiplinger Letter Outside of the tech sector slump, job growth in the South Central states remains buoyant, with healthcare, construction and business investment going strong.
By David Payne Published