Why is Bitcoin going up and how long will it last?
In 2021, bitcoin demonstrates incredible growth rates — just a few days ago, the price of the cryptocurrency set a new all-time high — $ 51,155 (At the time of publication, February 17). Since January 1, 2021, the rate of the main cryptocurrency has grown by 70% — by comparison, Tesla shares rose only by 9.1% in 2021. The main question is though: Will BTC’s growth continue or not? Also why is Bitcoing going up in in price? Lets ask the experts.
A few months ago, the topic of bitcoin and crypto was not very popular. But already in December 2020, the popularity of Bitcoin skyrocketed, as did the price. The number of search quarries with the word “bitcoin” has increased significantly, as can be seen in the graph below.
Today, bitcoin is talked about in every major media, and the reason for this popularity is the lightning-fast rise in BTC’s price, which doubled over the past 2 months.
On December 16, Bitcoin wastraded at $ 20,000 — a new price record and a psychological bar. Many analysts then talked about an imminent correction and called for selling BTC. However, since that day, Bitcoin has only grown and set new price highs.
Today, the cost of bitcoin is $ 51,100 and most experts say that the price of the cryptocurrency will continue to rise. But why is BTC’s price growing?
Pandemic
Bitcoin started growing back in March 2020 with the spread of the coronavirus. The pandemic led to an economic recession around the world: demand for petroleum products and raw materials fell, business activity slowed down in various sectors, primarily in the tourism sector, hotel and restaurant business. Small and large businesses, as well as the economies of entire countries, have experienced the most severe decline in recent years.
The USA, EU and many other countries were forced to stimulate the economy with the help of additional emission of money and social financing. Even then, many investors began to fear that such measures would lead to a weakening of traditional currencies. According to trader Paul Tudor Jones, the authorities spent more than the state earns — the result of the policy of stimulating the economy will be the depreciation of traditional currencies.
Fall of the US dollar and difficult times in the US
The US dollar index, which measures the value of the dollar against major world currencies such as the euro, Japanese yen and ruble, fell by 6.8% in 2020. This decline is likely to continue in 2021. According to experts, the main reason for the depreciation of dollar is the printing of money by the Federal Reserve System in the amount of more than $ 3 trillion over the past year, which is about three quarters of the total amount previously created over the 108-year history of the US central bank.
In addition to economic problems, there are several other issues. One of them is the unstable situation in the States — just recently several protests flared up in America. After the presidential elections, the population split into opposing camps, which are regularly having conflicts. An interesting story that describes the background was the arrest of an old lady with a loaded pistol and a “letter for Biden” near the White House.
The US dollar, which for a long time wsd the standard of stability and “savings keeper”, is gradually losing it’s status. Already today, citizens of countries with high inflation, such as Zimbabwe, Venezuela, Kenya, etc., prefer to keep their assets in bitcoins rather than in US dollars. Experts believe that due to the current state of America and their national currency, more and more countries will switch from Dollar to Bitcoin.
Institutional capital
Large Companies and Hedge Funds have become more interested in Bitcoin. Thus, the companies Tudor Investment and Guggenheim Partners, announced the purchase of bitcoins using futures contracts on the CME exchange in Chicago. Even older Wall Street firms like Morgan Stanley have sustained an upbeat sentiment about BTC.
Big financial companies like PayPal and Fidelity also bought bitcoins, while Square and MicroStrategy used their own assets to buy bitcoins. In the CIS space, we can note the interest in bitcoin assets on the part of the Czech investment company Goldfort. Over the past few months, Goldfort has acquired large amounts of BTC and the Bitexfin cryptocurrency exchange.
Elon Musk’s Tesla recently joined the institutional financial institutions. The company invested $ 1.5 billion in bitcoin — this helped the cryptocurrency to add 8% to the value as soon as possible. Analysts at JPMorgan Chase, the largest US bank, recently predicted bitcoin’s long-term price of $ 146,000. Time will tell whether this prediction will come true.
