Have you wondered why Bitcoin values are skyrocketing in spite of an atmosphere marked by fear and uncertainty due to the global pandemic, strained China-US ties, and even the Brexit? From $4748 in mid-March when the Covid outbreak happened to $30,000 in December 2020, the rise has been phenomenal to say the least. The climb has been unstoppable with Bitcoin prices recording an all-time high of $38,000 USD.
Why are Bitcoin prices going up?
- There have been multiple factors responsible for this sudden surge in Bitcoin prices. A lesser-known but possible factor could be the widespread prevalence of trading bots such as bitcoin profit roboter. Today, crypto enthusiasts are eager to take advantage of these bots. This is probably because market volatility is exceptionally high, government regulations are practically negligible, and there is an upsurge of young investors that lack programming skills. Bots are known to manipulate cryptocurrency prices by inflating this artificially. Their automated behavior forces the relatively new and inexperienced traders to overpay for assets.
- The last time the Bitcoin had peaked dramatically had been in June 2019. But this rise was temporary and prices came down to a shocking $3800. The situation improved in November again when Bitcoin shot over $14,000. Bitcoin does not appear to have any theoretical resistance point and investors are confident that it can push past the price point. It is this speculation that has accelerated an increase in its prices.
- Bitcoin has witnessed a huge price hike because of an influx of investors. These investors hail from large institutions like investment trusts, university endowment funds and pension schemes. The last time prices rose was in 2017, but at that time, the ecosystem was being mainly dominated by individual investors who were drawn to the Bitcoin because of its scarcity. This is possibly why the Bitcoin bubble burst as investors were buying mainly because of FOMO.
- Another key reason why Bitcoin prices could be on the rise is the inflation of the USD and the popularity of safe-haven assets. As an effect of the latest stimulus packages, there is the fear that the dollar’s purchasing power will come down and inflation will rise. So, many are moving back from the USD and taking refuge in assets that have risen in value or have traditionally had steady values. Such safe-haven assets are stocks, precious metals, and to a certain extent, the Bitcoin in recent times. Publicly traded companies are converting their cash into Bitcoins; for instance, Micro Strategy has converted $425 millions into BTC, and many others are following in its footsteps.
- Bitcoins prices are on the increase with more and more companies accepting it as a means of payment. For instance, PayPal recently announced its interest to allow merchants to trade and hold BTC and other crypto coins as payment. This news immediately pushed up prices of the Bitcoin because PayPal has a huge client base. Even PayPal competitors like Cash App and Square are now accepting cryptos, driving Bitcoin values through the roof.
- There can only be a maximum of 21 million Bitcoins and this means it is scarce unlike other assets that may be manufactured artificially or not 100% finite. Halving of the Bitcoin has also been responsible for its price rise. Bitcoin rewards are cut every 4 years and this reduces its rate of inflation.