Bitcoin Is Surging. Can It Hit a New All-Time High?

The rollercoaster ride that is crypto investing is back in the headlines. Bitcoin (BTC) just surged to over $57,000, taking it to levels we haven't seen since the end of 2021. Some experts believe this is just the start. Indeed, ARK Invest CEO Cathie Wood recently told CNBC she thinks Bitcoin could reach $1.5 million by 2030. 

Is Bitcoin heading for a new all-time high?

Bitcoin is certainly having a moment. The recent SEC approval of a spot Bitcoin ETF has sparked an influx of institutional investment. Plus, there's speculation that Bitcoin's upcoming halving event will push its price upwards. It has done so in the past. 

Speaking of the past, let's step back to Bitcoin's last high back in November 2021. Bitcoin peaked at almost $67,000 (per CoinMarketCap). At that point, the total crypto market had grown from less than $250 billion to just shy of $3 trillion in a matter of years. 

It felt like everybody -- from grandparents to influencers -- was talking about cryptocurrency. NFTs were all the rage. U.S. consumers were flush with stimulus cash and more willing to take risks. The bulls told us the sky was the limit.

A year later, Bitcoin had fallen by over 75%. Popular cryptocurrency exchange FTX collapsed, sending shockwaves through the whole industry. Investor confidence was sorely shaken. People wondered whether crypto would ever recover. 

Since then, Bitcoin has slowly erased its losses. Despite recession warnings, global upheavals, and economic uncertainty, the lead cryptocurrency has posted serious gains. In this context, there's a good chance that Bitcoin might regain its glory days.

On top of which, we're not in the grip of the same crypto frenzy as before. This fuels a hope that this is not another speculative bubble. Even so, the question isn't whether Bitcoin is heading for a new high. The real question is whether it can hold its current levels and build on them. 

The price is soaring. But what about fundamentals?

If you're a buy-and-hold investor, fundamentals and long-term potential are what matter. The difficulty here is that cryptocurrency remains a highly volatile and risky asset. It still faces significant challenges if it's to achieve its full potential. 

Here are some things crypto investors should consider.

1. Do you understand the regulatory situation?

There are two sides to the regulatory coin. On the one side, we've seen the consequences of the limited regulation in the current market. FTX was able to siphon off client funds and perpetrate large-scale fraud. Chainalysis data shows over $20 billion in illicit crypto transactions in 2023, with money being used for fraud, ransomware, scams, cyber crimes, and other illicit activities. 

On the flip side, if and when governments introduce stricter regulatory frameworks for crypto, it will almost certainly have an immediate impact on prices. In the long run, stronger regulation could build investor confidence, depending on what shape the rules take. 

Meanwhile, the SEC is still pursuing cases against several top crypto exchanges. At the heart of those cases is an argument that many cryptocurrencies are unregistered securities. If the SEC wins in court, this could have serious implications for the whole industry. As an investor, these are all issues to be aware of.

2. Where will you store your crypto?

Cryptocurrency investing is not like buying stocks or keeping money in a savings account. If you leave your cryptocurrency on the platform where you bought it, those assets could be at risk if your exchange or crypto broker fails or is hacked. One way to guard against this risk is to buy into a spot Bitcoin ETF through a stock broker. Another is to store your digital assets in a crypto wallet you control.

3. What do you see as Bitcoin's utility?

A lot of people who bought crypto in 2020 and 2021 did so because they were scared of missing out on the next big thing. That's understandable, especially given the stories of soaring prices and people becoming Bitcoin millionaires. But sadly, fear isn't a great basis for investments. Instead, try to base investment decisions on a solid understanding of what you are buying. 

In this case, that means knowing what blockchain technology is and what people might use Bitcoin for. For example, Jack Dorsey believes Bitcoin could be the native currency of the internet. ARK Invest argues it could take a chunk of the global remittance market, play a role as digital gold, and work as a currency in emerging markets. 

If you're thinking about buying or selling crypto, do your own research and think about whether these theories hold water.

4. Are you prepared to lose the money you invest?

So far, Bitcoin has proven resilient in the face of significant upheavals. But as we've touched on here, it is early days. Plus, an investment that drops by 75% in a year will not suit everybody -- even though it bounced back. If you invest money in crypto, know that there is a chance that you will lose it all. 

Key takeaway

It's heartening to see Bitcoin erase some of the losses of recent years. However, don't allow its recent rally to blind you to the challenges ahead. Even if Bitcoin hits a new all-time high, it will still be a risky, volatile investment. If you want to invest in crypto, make sure that crypto only makes up a small portion of your total portfolio.