Learn about the reasons for the rise and fall of the cryptocurrency “Bitcoin”

A large fluctuation in prices is witnessed by cryptocurrencies, especially Bitcoin, which reached its highest level, which reached about 64 thousand dollars, before witnessing a sharp decline that reached its peak last May to reach 37 thousand dollars, days after the tweet of the billionaire technical and entrepreneur Elon Musk announced a suspension Tesla car sales via bitcoin, as it is “investing in fossil fuels”. However, it has compensated some of its losses since then until this August, and its price currently ranges between 40 to 42 thousand dollars. Bitcoin is the world’s top cryptocurrency out of 9,944 currencies, which is its official number.

Bitcoin Cryptocurrency

Bitcoin is a digital currency that has a cryptographic feature that gives it a high degree of security and protection, which prevents fraud or duplicate transactions, as it is based on “Blockchain” technology that is able to provide great confidentiality and reliability, and it is a decentralized electronic network that is almost impossible to hack or monitor.

Bitcoin is a peer-to-peer online currency, which means that all transactions occur directly between equal and independent participants in the network, without the need for any intermediary to allow or facilitate transactions.

Here are the main reasons for Bitcoin’s decline:

US President Joe Biden’s decision to impose a capital gains tax of up to 43.4% affected crypto markets, wiping out more than $200 billion from the value of the entire cryptocurrency market, according to data from CoinMarketCap at the time.

Tech billionaire Elon Musk tweeted, last May, that the electric car company Tesla had stopped accepting Bitcoin as a payment method for the purchase of its cars due to environmental concerns related to the heavy use of electric energy in its production, as Bitcoin fell sharply. Also, Tesla may sell its currency.

China banned financial institutions and payment companies from providing services related to digital currency transactions last May, and warned investors against speculating in trading these currencies, and Bitcoin at that time witnessed a decline below $ 40,000.

The position of governments on the currency

Governments refuse to recognize Bitcoin because of the growing influence of this currency. Apart from electronic financial wallets that investors use to trade digital currencies on stock exchanges, the movement of funds through the private Bitcoin network cannot be tracked, and therefore the authorities cannot know who owns what? Or who transferred how much to whom? These are important questions to ensure the integrity of financial systems and to track down criminals.

bitcoin symbol

Bitcoin is denoted by the abbreviation “₿”, just as some traditional currencies are represented by special symbols such as “$” for the dollar, “€” for the euro, or “£” for the pound sterling.

A new fund that allows you to invest in Bitcoin without buying it

There appears to be a new way to invest in bitcoin without actually buying any unit of the cryptocurrency, as ProFunds, a Maryland-based company in the United States, on Wednesday launched its first publicly available mutual fund linked to the value of the largest cryptocurrency.

According to Al Arabiya Net, the Profund Bitcoin Strategic Fund invests in Bitcoin futures contracts and aims to achieve the results of tracking the price of the digital currency.

This comes as more than a dozen investment companies have applied to launch exchange-traded funds that invest in Bitcoin futures, but so far US regulators have not issued any decisions.

In June, the Securities and Exchange Commission requested a decision on approval of a Bitcoin index fund for the second time in 2021.

The debut coincides with Bitcoin’s longest winning streak of the year, as the coin surged 7.5% yesterday and climbed back above $40,900.

The cryptocurrency has seen significant fluctuations over the past year, and the Securities and Exchange Commission has warned investors that they should be aware of the risks of investing in mutual funds that hold Bitcoin futures.

Buying Bitcoin and other cryptocurrencies directly has also become easier, as companies like Robinhood Markets and CashApp have created ways to put money into coins without going through the tedious process of opening a digital wallet or storing vital passwords.

The Profund Fund’s total expense ratio is 1.15%, which is slightly higher than the typical ratio of 1% or less for ETFs.