Last December, Bitcoin hit a sudden boom, and since then, it has been growing exponentially setting new records. The volatility in Bitcoin’s price is seen as a big opportunity for investors to earn huge profits. During the global pandemic, where other currencies have gone through some serious upheaval, cryptocurrencies such as Bitcoin witnessed an unprecedented demand. An alternative to central bank-controlled money, Bitcoin is at the top of the list amidst other cryptocurrencies for transferring money through online platforms. The reason being its effective decentralized network offering transparency with a limited set of regulations.
Earlier, the price of one Bitcoin was 6,00,000, which has risen by approximately 400% and reached around 25,00,000 in the month of March (2021), the span of sudden growth is recorded as seen within six months. So when the market is up, investors grab the chance to earn profits making the most of this volatile period. The recent increases in Bitcoin can have various reasons, which have sparked new interest levels among financial institutions and investors.
1. Institutional Interest
The growing inflation of the U.S. dollar is the biggest reason for the rapid rise of Bitcoin. While safeguarding funds against this rising inflation, many investors seek shelter in assets that have held value in critical times. After observing the current economic scenario, people preferred to convert their dollars to less volatile assets, known as ‘safe-haven. Today, Bitcoin has turned into a strong hedge against drastic market swings.
In recent times, publicly traded companies opted to convert their generated revenue to Bitcoin as a store-of-value. Like MicroStrategy converted $425 million worth of cash in its treasury to Bitcoin. Shortly after that, Square made a $50 million purchase. Now the number has grown, and many big companies & their investors have restored their faith in Bitcoin as a safe-haven asset.
2. Positive Analysts
The Wall Street analysts have built a positive approach to Bitcoin’s future. Their statistics record
has shown that Bitcoin can surge as the prominent cryptocurrency in a global market. . A report published by AllianceBernstein, a $631 billion money manager, says that the post-pandemic economic environment could create a role for bitcoin in investors’ asset allocation. Also, the co-head of the portfolio strategy team, Inigo Fraser Jenkins, announced that when it comes to hedging against inflation, bitcoin drivers will be considered similar to gold. The current year is no more than an iconic year for Bitcoin, and it is expected to remain positive for the preceding times.
3. Easy Accessibility to the potential investors
Over the past decade, cryptocurrencies have made a mark as more than a mode of exchange and a store of value. Now the crypto industry is much more than a legit payment method, as the big investors are considering it as an emerging asset class. Even if the public is less interested in adopting cryptocurrencies for transactions, investors choose it for converting their cash for its intense deflationary behavior that makes it a better hedge against rising inflation and a store of value. In a country like India, after the centralized regulatory body RBI has lifted the ban, Bitcoin has seen a significant surge in its investors.
4. The Paypal effect
In 2020, Paypal launched the crypto buy/sell feature in its platform while including leading traded cryptocurrencies including, Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. So, with this new update, the company has announced its person-to-person payment network where the customers could buy, sell and hold bitcoin. With Paypal’s support, there has been a tremendous demand for the asset class, increasing the price rise of the currency.
5. Okay with OKEx
One of the largest cryptocurrency agencies, OKEx has amazed with its outflow record of 24361 Bitcoin worth $500 million (at current price), since the latest market crash (as of December 2020). The five-week suspension withdrawal by the company has brought the greatest outflow. The speculations made by the traders and analysts that the sudden liquidations might put selling pressure on the bitcoin market.
After observing the market trends, the reason for an all-time high price for Bitcoin seems to be connected to the global economic crisis caused due to Covid-19 pandemic. Along with this factors like the price drop of valuable currencies such as the U.S Dollar contributes in shifting the interest of investors to digital currencies. According to market analysts, the emergence in the crypto industry could crown Bitcoin as the new leading global currency.