Bitcoin gained public attention for the first time in 2017, when it reached $20000 per coin, making it the top (crypto)currency. Everyone wanted to own a piece of bitcoin, no matter what. It wasn’t long to be more exact 22 days after it went up for another 20 thousand, but it experienced a fair share of drastically going down after it. It completely crashed. Many became sceptical and started to think about whether they should consider Bitcoin something they should invest in.
Still, Bitcoin remains the strongest cryptocurrency, and we experienced another significant surge where it reached 20,000 again in December 2020. This time, experts predict Bitcoin will continue to boost despite the ups and downs that are expected. The current value per coin is around 32 thousand dollars.
Besides being top valued, bitcoin also has the top volatility, and it’s no wonder there are huge differences and unexpected changes in value. Here’s what possibly spiked bitcoin’s rise and why experts think it won’t crash like it did a couple of years ago.
Traders’ FOMO
Investors are usually the ones who push the price and cause a rally in the market, and that is what happened to bitcoin in 2017, especially to public institutions. What is the difference this time around? Fund managers are afraid of missing out on Bitcoin’s rise and extremely volatile market, so institutional investors started investing billions (yes, billions), into the whole cryptocurrency market. It is they who pushed Bitcoin to its new rise in December 2020. People tend to diversify their trading portfolio and bitcoin happened to be on top of that list again.
Inflation hedges
We are still deep into a pandemic (for almost a year) and don’t think COVID-19 didn’t have any role in boosting crypto prices. The Health crisis impacted various governments since they had to pass a fiscal stimulus worth trillions of dollars to keep up with the economic damage the pandemic is causing. Once that started happening, we got a sudden influx of fresh currency which boosted bitcoin as a hedge against inflation. Don’t forget the fact Bitcoin has a limited supply of 21 million, and once it hits the cap, it will no longer be mined. Many see Bitcoin as an alternative to hedge assets such as gold.
Confirmed legitimacy
While in 2017 Bitcoin and other altcoins were considered shady, which impacted the investment potential they had. Three years later, Paypal gave Bitcoin the most significant boost by adopting it as a standard payment method. It means they confirmed its legitimacy and sparked interest among investors. It has been mentioned recently national banks consider using blockchain for payments, so cryptos could be fully legitimized since blockchain is far safer.
What happened in 2020
Google search for Bitcoin tripled between October 2020 and January 2021. What was the cause? Influencers and celebrities, mostly. Everyone, from actors to YouTubers started tweeting or making videos about how they are beginning to trade themselves, especially cryptos. Even astrologers began making videos about the stock market, predicting how Bitcoin and Ethereum will perform this year. Of course, it got everyone’s attention. Suddenly, everyone started putting money into the crypto market and became an expert in it.
In conclusion
There are still investors dubious about the rise of Bitcoin and don’t believe experts with their predictions. They still think it’s a touchy subject, and the market is so volatile that we can’t know what will happen.
While others claim Bitcoin will overcome challenges, some think it’s another bubble that will burst at anytime. What is good about the rise of Bitcoin is keeping or protecting prices and interest in blockchain and altcoins from going to their lows like in 2017. It seems like we have a different situation this time because Bitcoin is slowly entering the territory of “regular” currency. We can expect a lot more than three years ago.
