Bitcoin surpasses maximum without fear of overvaluation.
Inflows into Bitcoin ETFs indicate strong market confidence.
Bitcoin (BTC) has achieved a significant milestone this week by reaching unprecedented price peaks. These levels have not generated concerns of overvaluation among investors, which is often the case with traditional stocks. Industry experts are analyzing this phenomenon and see it as an indication of the cryptocurrency market’s strengthening.
Hunter Horsley, the CEO of Bitwise Invest, highlights the uniqueness of Bitcoin compared to stocks. He explains that in the stock market, rising prices often lead to increased multiples, which can raise concerns about overvaluation. In contrast, rising Bitcoin prices are viewed as a sign of higher potential for success and future appreciation.
“When the price of Bitcoin goes up, people recognize its increased probability of performing well and becoming even more valuable. Consequently, it is likely to continue rising,” says Horsley.
Bitcoin is different from equities in a key way: reflexivity. When a stock price rises, the multiple also goes up. However, at a certain point, people may perceive the stock as overvalued and become less interested, leading to a price decline. Bitcoin, on the other hand, exhibits a different pattern.
Bitcoin’s current trading price is $79,000, reflecting a 16% increase in the past week. This surge coincides with approximately $1.63 billion of inflows into Bitcoin ETFs in the US during the presidential election week, as reported by financial market analysis.
Disclaimer: The views and opinions expressed in this article, by the author or any mentioned individuals, are for informational purposes only and should not be considered as financial, investment, or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.