On Tuesday, the price of bitcoin hit its highest level in more than 4 months, continuing a rally that began in 2023, according to Reuters.

BitcoinPhoto: Pexels

The price of one bitcoin reached $21,594 on Tuesday, a level the world’s largest cryptocurrency has not reached since September 13 last year.

Bitcoin has rallied nearly 30% this year on optimism that last year’s record inflation has peaked in the United States and other major economies, which could prompt central banks to ease policy on key interest rates after repeatedly raising them.

During the COVID-19 pandemic, Bitcoin and many other cryptocurrencies have skyrocketed as central banks and governments have poured huge sums into the economy as part of support packages for individuals and businesses.

But once central banks began tightening monetary policy to bring inflation under control, a measure tied to rising interest rates on government bonds, cryptocurrencies became less attractive to investors, as did so-called “growth” stocks from the stock market. Tesla is one of the most notable examples in this regard.

In fact, Elon Musk has directly accused the Fed, the central bank in Washington, of being responsible for the collapse of the automaker’s share price on the stock market.

Doubts about the return of Bitcoin

While this year’s bitcoin resurgence looks impressive, especially after the collapse of FTX, the second-largest cryptocurrency trading platform, some analysts warn that it could be a temporary “little wave.”

Some long-term crypto-investors are also concerned that this unexpected Bitcoin-driven market rally could be the result of pumping.

This refers to situations where a player with a large amount of capital throws a large amount into the market, waits for the inevitable price increase, and then sells en masse at a profit, while small investors watch the price fall again.

The price of Ethereum, the second most important cryptocurrency after Bitcoin, has also increased by 17% in the last 7 days, while other cryptocurrencies such as Solana (+43%) have recorded even more impressive gains.