Crypto News: Why Is Bitcoin Price Rising?

You will probably recall how remarkably Bitcoin performed when the entire world faced lockdowns because of the coronavirus pandemic. With economies all over the globe being hit and traditional assets facing a setback, people were rushing towards cryptos. The history of the Bitcoin has been marked by continuous rises and falls; a crash has almost invariably been followed by a surge. The crypto market rose again recently when the Chinese crackdown on cryptos made headlines. Bitcoin experienced a small spike and the digital currency is currently hovering around $47,000.

Reasons why Bitcoin Prices may be on the Rise:

  • Since Bitcoins does not have any theoretical resistance point, investors have turned bullish. They are confident that it will bounce back soon after a setback. They believe that the crypto can retest price points and even push ahead past it. Such speculations have been instrumental in increasing Bitcoin prices.

  • The inflation of USD is probably another significant reason why the Bitcoin prices shot up. Inflation is typically about 2% a year, but the recent pandemic made governments all over the world introduce stimulation packages to revive their economies. The US has added almost $2.4 trillion which is the process decreased USD’s purchasing power. To hedge against this rise in inflation, people have started looking for assets which have held value historically. These “safe haven” assets, as they are called, were earlier the precious metals, and in recent times, the Bitcoin.

  • As more and more businesses start accepting Bitcoin payments, Bitcoin’s mainstream adoption seems certain. Recently, Square and PayPal both declared that they would allow their users to buy, hold, and sell cryptos. This positive sentiment amongst institutional investors has pushed up Bitcoin prices. PayPal has been one of the earliest known critics of cryptos but with it hopping onto the crypto bandwagon, things have started looking up for the Bitcoin. PayPal owns the app Venmo which caters to more than 40 million people. This makes the Bitcoin highly accessible. On the other hand, the trading bots help all types of investors to trade efficiently. To know more check the bitqt erfahrung that has the opinions of real users of the bitqt trading bot. Publicly traded companies have started converting their money into Bitcoins because they feel it is a better store-of-value. Business analytics firm, Micro Strategy, has done this in recent times, converting $425 million into BTC.

  • Perhaps the strongest reason so far that led to the unprecedented Bitcoin price rise since March 2020 has been the halving. Bitcoins have a finite supply which means there can only be 21 million Bitcoins and no more. This makes the crypto scarce, unlike other assets, which may be manufactured synthetically. Secondly, Bitcoins are subjected to “halving” every 4 years when the reward is cut down by half. This indicates that the inflation rate is also reduced by half while its stock-to-flow ratio gets doubled. Till date, Bitcoin prices have followed the stock-to-flow ratio closely, and it can be expected to continue this in the future too.

  • Another key reason for Bitcoin’s price rise has been the increase in mining difficulty as the mining network kept growing. This implies that marginal costs will also increase substantially. Bitcoin mining is a hugely energy-intensive process and entails steep costs. A single block takes about 10 minutes to be mined, and greater hash power does not increase the number of Bitcoins; it only increases the mining difficulty.

With cryptos becoming more accessible by the day, retail investors and the general public want to pay to get a slice of the Bitcoin pie. Do not be skeptical about the rise in Bitcoin prices; it is not late to enter the market; rather, it is just the right time to test the waters.