Fastrading: What is responsible for the increase in the price of bitcoin?
After the financial market crashed in March 2020, bitcoin's price dipped to about $4,000; the digital currency has since been on the rise. Its first leg up was between $8,000-$10,000 before it finally broke into the $13k-$15k resistance in early November 2020.
And by December 16, 2020, Bitcoin rose to about $23,000 before it broke the $30,000 resistance on January 2nd, 2021, and reached an all-time high (ATH) of more than $40,000 on 8th January 2021.
As Bitcoin continues to appreciate, many keep asking why the digital currency keeps moving on the rise.
Reasons why Bitcoin's price keeps rising
According to the experts of Fastrading, as the cryptocurrency world keeps growing from what many people don't understand to becoming a mature market that interests investors, bitcoin continues to appreciate. Bitcoin is now a viable market for whales such as famous billionaire investors, large financial institutions, and several other retail investors.
What are the reasons for the increase in the bitcoin's price over the last few months?
● Lowering purchasing power of the dollar
● More institutional adoption of bitcoin
● Maturity of the cryptocurrency market
Above are some of the factors responsible for the increase in the price of bitcoin.
1. Lowered purchasing power of the dollar: Since the dollar keeps falling in dominance, many investors are now looking for other alternatives to put their money to retain its value. Knowing this, many of the billionaire investors have chosen bitcoin and other digital coins as assets to invest. It used to be gold in the past, but now it is bitcoin.
2. More institutional adoption of bitcoin: Now that bitcoin is viewed as an asset that can store value, many large financial houses adopt bitcoin. In 2020, several large institutions, both public and private, accumulated bitcoin instead of holding cash in their treasuries.
3. Inflation: Another apparent reason for the increase in the price of bitcoin is the high inflation rate. The coronavirus pandemic has been ravaging the world since 2020. Many stimulus funds have been injected into the economy by different central banks to keep the economy afloat, leading to inflation. With the stimulus funds come the fear of more excellent inflation rates. Hence, investors are interested in assets like bitcoin that will serve as a hedge against this inflation.
Bitcoin has come a long way since it was released in 2009. And over the years, it has become more seamless to access the digital currency with fewer hurdles to cross when buying or using the cryptocurrency. With this ease comes the increase in value and appreciation of bitcoin.
What does the future hold for bitcoin's price in 2021?
2021 started on an exciting note for bitcoin, and it looks suitable from here onward. With the rise in bitcoin adoption by big institutions and investors, bitcoin could reach about $50,000 to $70,000 by December 2021. However, with the coronavirus pandemic still out there ravaging the world, no one can say if the market will stay afloat all-year-round.