Some suggest that investors are rushing towards the cryptocurrency because they consider it a good hedge against inflation, now that fears of higher prices are taking over the market.
Bitcoin recovered its losses yesterday, gaining 3.91% during the session and breaking the $50,425 level. The currency has doubled its price since the beginning of the year, as its volatility climbed in February and hit a level not seen since April 2020.
Bitcoin has been gaining territory this week, rising by 8.62% after falling 17.23% last week. Some suggest that investors are rushing towards the cryptocurrency because they consider it a good hedge against inflation, now that fears of higher prices are taking over the market.
Adding to this, some big names and institutions have recently expressed their support for this currency. Tesla and MicroStrategy announced their decision to invest in Bitcoin, while BlackRock, MasterCard and BNY Mellon announced their support for it.
Regulation concerns have also permeated the markets. Recently, SEC Chairman nominee Gary Gensler said that he was going to make sure that cryptocurrency markets are not manipulated, signaling more regulatory measures.
“Bitcoin and other cryptocurrencies brought new thinking to payments but raised new issues of investor protection we still need to attend to,” Gensler said, adding that cryptocurrencies are catalysts for change and that it’s important that the SEC provides guidance and clarity.
China’s inner Mongolia Bitcoin mining hub, which mines around 8% of all Bitcoins and is the third-largest mining site in China, announced its plans to shut down mining activities as well as ban new projects in an attempt to reduce energy consumption. The Chinese government is currently attempting to turn the country carbon-neutral before 2060, so further restrictions on Bitcoin mining are expected.
Other cryptocurrencies have also gained ground. Ethereum rose by 5.49% during the session, closing at the $1,568.08 level, followed by Dogecoin which gained 0.26%, closing the session at the $0.050494 level.
By 10:33 GMT, Bitcoin fell by 4.62% against the US dollar to the $49,172.7 level.
Read More: Bitcoin Recovers as Inflation Fears Rise