Bitcoin is on the rise of $18,000 – here is why it is booming again The cryptocurrency

Bitcoin is on the rise of $18,000 – here is why it is booming again The cryptocurrency

• Bitcoin has bounced back from its lowest point in March at $4,900 and has already crossed $18,000.
• Bitcoin is trading at a three-year high, and the cryptocurrency is inching closer towards the all-time high of $20,000.
• Experts believe this time around the growth will be sustainable and is here to stay.

Bitcoin, everyone’s favorite cryptocurrency, is not only out of the woods but is witnessing a bull run. Bitcoin has bounced back from its lowest point in March at $4,900 and has already crossed $18,000 – its highest since December 2017. It is inching closer towards the all-time high of $20,000.

Bitcoin prices in 2020 have been rising for 112 days, making it the first time in history it has achieved this. The 12-year old cryptocurrency has seen euphoric highs and biggest crashes but experts believe this time around the growth will be sustainable and is here to stay.

“This time there are more genuine reasons for the price increase like American hedge funds adding crypto assets to their balance sheet, PayPal allowing access to its millions of customers to buy and sell cryptos followed by an announcement from DBS bank that they will soon start providing trading services for crypto to their clients. It looks like the growth we are seeing now is more sustainable and the global recession and pandemic is fuelling it,” said Sathvik Vishwanath, CEO of Unocoin.

Here’s why Bitcoin is booming again

The faith of institutional investors

Bitcoin has found a stronger foothold in the market with American hedge funds and institutional investors turning to the crypto market. Even major banking institutions like Citibank and Bank of America are talking about crypto assets.

In fact, JPMorgan Chase’s billionaire CEO Jamie Dimon, who had earlier called Bitcoin a “fraud”, switched sides to say that he believes in Bitcoin, even though it is not his cup of tea. JP Morgan had launched its own cryptocurrency last year called JPM Coin.

“The recent bull run in Bitcoin is caused due to increasing investment from institutional investors, investment banks, and more importantly payment companies. This is largely owing to a shift in investor sentiments towards alternative asset classes, especially digital assets,” said Monark Modi, Founder, and CEO, Bitex.

Modi added that another factor has been the likes of an investment bank like JP Morgan Chase which has adopted blockchain-based interbank payment systems through Stablecoins. “Judging by this heightened interest towards cryptocurrencies, Bitcoin has the potential to touch $22,000 by coming quarter,” he said.

PayPal’s Bitcoin push

One of the biggest factors behind the bitcoin bull run is fintech leader PayPal accepting cryptocurrency on its platform. PayPal said that it plans to “significantly increase cryptocurrency's utility by making it available as a funding source for purchases at its 26 million merchants worldwide.”

Right after PayPal’s announcement which was termed as the biggest news for crypto in 2020, Bitcoin had surged over 8%.

"Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption, and interoperability of these new instruments of exchange. We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce,” Dan Schulman, president, and CEO, PayPal had said in October.

COVID has changed investor outlook

As COVID-19 brought in market uncertainties all around, investors became more accepting of Bitcoin as the cryptocurrency offered an alternative to gold. “The virus crisis is propagating the reassessment of bitcoin. There is a reassessment about its value here as an alternative currency; as an alternative to gold,” Nikolaos Panigirtzoglou, an analyst at JPMorgan told the Guardian.

The Bitcoin halving event

Bitcoin halving takes place when the reward for mining Bitcoin transactions is cut in half. During this, the cryptocurrency’s inflation rate is halved and so is the rate at which new bitcoins are circulated. The last Bitcoin halving event took place in May 2020.

“In the previous 2 halvings too, Bitcoin and the overall crypto market cap rose exponentially, and we are expecting a similar trend. This time around, we are witnessing interest not only from retail but institutional investors globally too,” said Sumit Gupta, Co-founder, and CEO, CoinDCX.

Gupta expects that along with Bitcoin, the prices of other cryptocurrencies like Ethereum too will now increase. “This is mainly because both Bitcoin and Ethereum have strong fundamentals. We are expecting Ethereum also to perform well in the next few years owing to ETH 2.0 scheduled in December 2020,” said Gupta.

ETH 2.0 or Ethereum 2.0 is the next upgrade to the Ethereum blockchain, scheduled to be launched in December 2020 after a long delay.

Source: BusinessInsider