.png){kind=logo}
Bitcoin, often hailed as the first true cryptocurrency, has experienced dramatic price swings throughout its existence. In 2024, several factors have affected the price of Bitcoin including political crisis, macroeconomic changes, and even certain cryptocurrency milestones. However, evaluating its behavior in relation to various world processes, it turns out that Bitcoin is coupled with unpredictable trends. The following report presents an elaborate analysis of how several influential global factors affect the market trends of Bitcoin in 2024.
Political events are widely believed to cause direct effects in the financial market, including cryptocurrencies. However, perhaps the most intriguing aspect of these tensions has been the Middle East which has been a theatre of political conflict and the manner in which Bitcoin reacted to these tensions has pointed out what Bitcoin is in the world financial architecture.
The Bitcoin price has decreased due to geopolitical crises such as the missile attack by Iran on Israel in October 2024. This event called into question any utilization of Bitcoin as a safe haven currency whenever there is a conflict. In the past, people would invest in assets such as gold during the occurrence of increased geopolitical risk that calls for a rapid increase in the price of gold. Nonetheless, the response of Bitcoin to such an event has not been very bullish at all.
Although at times Bitcoin has been referred to as ‘digital gold’ its behavior during geopolitical crisis has been quite different. In this case, Bitcoin failed to hold its value while traditional safe-havens such as, gold recorded sharp uptrends. Investors, being sentimental and vulnerable, are generally known to scale down their exposure and seek the securities that have so far proven to provide resilience during these grim times. This led to a fall in the value of Bitcoin contrary to the aim of Bitcoin which is seen as being an investment that people can hold during volatile times in the world.
But, still, its reaction to geopolitics is unpredictable. The opponents of this model note that Bitcoin market is still young in its evolution and still possesses significant volatilities owing to the sentiment effect. As the market evolves in the future, and more people started recognising Bitcoins, the product may be more resistant to the negative effects of geopolitical crises.
Still, the Bitcoin rate depends on macro signals, such as the state of leading world economies and the activities of the respective central banks. In 2024, the situation with the US remained, with some economic releases that can influence the value of Bitcoin directly.
One of the key factors influencing Bitcoin’s market in 2024 was the strength of the US labour market. A series of positive job reports suggested a thriving economy, which initially caused Bitcoin’s price to dip. When traditional markets show strength, investors often feel more secure investing in traditional assets such as stocks and bonds, pulling away from more speculative investments like Bitcoin.
In addition, price of the bit coin fluctuates in response to any changes in interest rates policies especially of the US. Similar to most investments, bitcoin gains from low interest rate as many investors seek to capture higher returns from risk assets. Federal funds rate forecasts from the survey to the Federal Reserve’s policy direction for the years 2024 was quite a concern. Speculation of such a policy is that for a similar reason, a change in the direction of a decrease in interest rates by the Fed will positively affect the Bitcoin price level. In the past, low interest rates have led to increased investment in Bitcoins since the returns on investment in the cryptocurrency are far much better than investing in low-risk assets.
As such, should the inflation rates be still high and if the Fed decides to maintain high interest rates, then Bitcoin could be the loser. This movement because Bitcoin works as an investment instrument, trying to find a profit in moments when growth in other markets is slow.
Another major event in 2024 was the Bitcoin halving, which took place on April 19, 2024. Bitcoin halvings occur approximately every four years and are programmed into Bitcoin’s code to reduce the reward for mining blocks by half. In 2024, the reward was reduced from 6.25 BTC per block to 3.125 BTC. Historically, halvings have led to price appreciation in the months following the event due to the reduction in the supply of new Bitcoin entering the market.
The 2024 halving generated significant anticipation among the Bitcoin community. This is because the event creates scarcity in the market, which traditionally leads to increased demand. While it’s important to remember that past performance is not always indicative of future results, analysts have remained optimistic that Bitcoin’s price could appreciate in the long term due to the increased scarcity caused by the halving.
In terms of overall market sentiment, Bitcoin’s outlook for the rest of 2024 is relatively bullish, albeit with caution. Bitcoin’s price had been hovering around $50,000 in November 2024, with some analysts predicting that the cryptocurrency could rise to as high as $96,945 by December 2024. This would represent an increase of roughly 28% from current levels, with predictions largely driven by the continuing market adoption of Bitcoin and the ongoing interest from institutional investors.
There is still some negativity regarding the risks associated with the bullish market on the horizon. Warning lights flashed when pundits noted that if Bitcoin’s price is unable to hold important support levels, then it is vulnerable to steep losses. There are expectations that Bitcoin price pullback could take the value down to 42,000 if main market trends go bearish.
Still, even though there has been uncertainty about Bitcoin’s future the majority of analysts are sure that it is still going higher. This is due to the fact that more investors are investing in it as a store of value and the continuously rising usage among both the retail and institutional investors makes it be one of the most resistant cryptocurrencies.
To sum up, the effect of geopolitical tensions, macroeconomic factors, the halving and sentiment on the Bitcoin price up to 2024 has been determined. Of course, bitcoin remains a highly risky and indeed a very volatile asset, but due to its becoming both a real ‘bubble’ and a store of value, bitcoin’s price will inevitably correlate with events of the global scale. Despite the current state of Bitcoin, investors will need to be careful focusing on the likely political, economic and market factors that may affect the Bitcoin. In the future, as Bitcoin evolves and with increasingly sophisticated markets, Bitcoin might adapt more predictable reactions to these occurrences but at the present time of writing, such events still cause Bitcoin’s price swing.
