While 2023 was mired by the FTX scandal that was exposed in November 2022 and reports that earning opportunities for crypto millionaires had dried up, there is a renewed interest in bitcoin investment this year. Earlier this month, bitcoin’s value rose to an all-time high of more than $73,000. Last March, for comparison, the price hovered in the $20,000 range.
The surge in bitcoin’s value has not been a surprise to Miami-based finance professional Jeff Sekinger. He believes bitcoin has historically gone through four-year cycles of three bull markets, with pronounced increases, and the fourth year being a bear market, with a notable downturn. Sekinger suggests that Nov. 11, 2022, around the time that FTX went bankrupt, marked the end of the last four-year cycle. One year later, the market saw a 117 percent increase in value.
Sekinger said one catalyst for increased investment this year was the January announcement of the bitcoin exchange-traded fund (ETF) approval, which will allow more traditional investment firms such as Blackrock and Fidelity to invest in bitcoin.
Bitcoin, which was first mined in January 2009, was designed to be limited in nature to protect its value against scarcity and inflation. The realization that there is a limited amount of bitcoin to invest in is another factor that has likely emboldened investor interest.
“More dollars coming in doesn’t mean more bitcoin will be released,” Sekinger said. “[Like] any precious metal or fixed commodity, we know how much bitcoin will be released over 100 years, and 93 percent has already been released. Only 7 percent will be released in the next 100 years.”
Miami-based tech founder Will Weinraub, the CEO of OnChain Studios, has invested in bitcoin for the last 10 years and is accustomed to the ebbs and flow of its market. The Miami Beach native’s decade of experience in trading bitcoin has shaped his perspective on investing, with long-term success in mind rather than a desire to quickly cash out.
“It’s not about timing the market, it’s about time in the market,” he said of his consistent investment in bitcoin. “It’s something to invest in for my kids.”
Like many other bitcoin traders, Weinraub considers himself an early adopter of new technology, and the idea of a centralized currency always resonated with him.
William Luther, an associate professor of economics at Florida Atlantic University, has followed the emergence of cryptocurrency since its development. Luther believes bitcoin launched as a response to the Great Recession. Tech enthusiasts shared the idea that the U.S. dollar had failed, creating an unsustainable boom-bust cycle. Bitcoin became an alternative.
Despite that, Luther emphasized that it is difficult to argue that bitcoin is succeeding today solely because faith in the dollar has plummeted. He believes bitcoin can only become more valuable in the future as a useful commodity, since it is a way to store value.
“The value of a currency depends on its usefulness for making transactions today and value for making transactions in the future,” he said.
Miami lawyer Alan Rosenberg works with cryptocurrency investors, creditors and fiduciaries and counsels them on how to recover crypto-related assets. He believes that potential investors should do their research on companies before investing. Understanding the structure of cryptocurrency is more important than investing with the idea of how much money something can earn, he said.
“The first genuine thing to understand are the risks inherent in cryptocurrency investment are the same risks with any other investment,” he said. “When people say they’re investing in crypto, that doesn’t mean anything to me. After they all kind of figure out what they want to engage in, the next thing investors need to do is be educated about what they can afford.”
By understanding cryptocurrency and how it trends, investors can be better prepared for cases of potential crypto insolvency, he said.
“With the fallout in crypto insolvency cases, we saw people put their whole life savings into crypto and lose it all. You always have to know what you’re investing in and how you’re making money,” Rosenberg said.
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