Name: Bitcoin’s New Record Highs: What’s Changed Since 2021’s Crypto Rally | WSJ Then vs. Now
Uploaded: 2024-06-11T04:37:03.000Z
Duration: 5 min 24 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

The second conditional

If you bought one Bitcoin in 2019 at $4,000, it'd be worth over $70,000 right now, a 1,700% return.

Modal verbs - B1

Sound familiar? In 2021, that same investment would have been worth $58,000.

But just six months later… Crypto king to criminal suspects.

It's not just big companies, but real people losing a lot of money.

The crypto market's capitalization fell from $2.9 trillion to $798 billion.  But there are two differences between then and now that could change how long this run lasts and who's affected.

First, let's look into where the money going into this surge is coming from.

In 2024, inflation has largely settled compared to before.

Consumers are still spending, and breakthroughs in AI are helping to drive a market rally.

The Dow even passed $40,000 for the first time ever in May.

All of this means investors have more cash on hand to bet on riskier assets, creating the right environment for a run on crypto.

These markets go up.  Unlike 2024, the 2021 crypto rally took place during a different type of market rally, beginning here.

So the Federal Reserve stepped in, spending trillions of dollars to reverse this drop.

And the Treasury sent Americans stimulus checks to keep the economy churning.

We got the stimulus checks and a lot of retail investors put it into the crypto market.

It's sort of a reflection of a lot of money sloshing around in the markets.

And they found their way into these speculative corners of the markets.

That's why crypto went up so much during the pandemic era.  Then that influx stopped.

In 2022, inflation became a real problem.

The Federal Reserve said it was going to raise interest rates to tame price pressures.

All of a sudden, all kinds of risky assets and crypto went down.

Then immediately things started breaking.  While crypto is still considered risky today, some say that current underlying market conditions could keep the rally going a bit longer.

A lot of crypto bulls believe that there is no limit in terms of where Bitcoin can go.

Some have put out really aggressive price targets of more than a million.

And the way retail investors are placing their bets differently factors into those price targets.  This year, regulators approved a new, easier way to invest in crypto.

They allow investors to buy into a fund, the F part of ETF, that then buys Bitcoins.

And since ETFs are available in most major brokerage accounts, investing in Bitcoins has become easier.

So you can open your trading app and then just buy Bitcoin alongside your other assets.

They're run by Wall Street giants like Fidelity and BlackRock, who take on the responsibility of safeguarding customers' Bitcoin holdings against hacking and other cybersecurity risks.  There were a lot of expectations for these Bitcoin ETFs to open the gateway for retail investors.

That sort of translated into higher price for Bitcoin.

Because the more money you put into these funds, the asset managers would then go out and buy Bitcoin.

So it becomes sort of a circular trend where the more investors want to buy Bitcoin, the more the price of Bitcoin goes up.

In the last rally, most investors still had to trade on crypto exchanges.

Many put their money into new, unregulated exchanges like FTX, which collapsed when investors tried to withdraw their money en masse.

The collapse of FTX has sent shockwaves across the cryptocurrency industry.

FTX didn't have enough money to cover the transactions, partly because executives had used customer deposits for personal spending and other illegal activities.

It really kind of tainted the reputation of the crypto industry, and Bitcoin started falling rapidly to as low as $16,000 towards the end of 2022.  But with these high-profile bad actors flushed out and Wall Street on the crypto bandwagon, the cryptocurrency market now has investors who were skeptical before pushing the market cap to $2.6 trillion.

It kind of brought this sense of comfort for investors who are familiar with these Wall Street brands and know that the asset they invested in is in a more regulated vehicle.  But crypto's main attraction is still its promise of high risks and high rewards.

 A lot of crypto skeptics believe that even though Bitcoin is going up now, it's bound to repeat its previous trajectory of going down or maybe even going to zero.