This time with different reasons compared to 2017
A few years ago, Bitcoin was in all the media headlines as the coveted new digital currency that would change the world’s finance systems.
Instead, it crashed spectacularly after hitting $20 000 as the poster child of all cryptocurrencies tumbled down towards $9000 and then into the $3000 range.
However, it has been climbing slowly in the last year and then catapulted in the last few months into a new high. As of writing this article, it has since hit a new high of $22K and is still looking to gain momentum.
In a time of economic and political unrest, the climb of bitcoin has been a fun one to watch. As someone who’s been a passive investor in it since the early 2017s, I’ve seen my portfolio go up and down in waves.
In 2017, the reason for the surge in the price of bitcoin and other coins was fairly clear. This was mainly due to media hype and retail investors being involved, which pushed coins to many highs.
But why has bitcoin hit a new high once again?
Unlike a few years ago, there isn’t one clear answer but instead, multiple ones all stitched together.
Let’s explore some of these reasons.
Paypal and Square’s involvement with Bitcoin
The payment gateway company has opened up its doors to cryptocurrency as users from the US can now purchase bitcoin from its systems. It has also announced it will open this up to more countries in 2021.
This is especially huge news since eBay owns Paypal. With both eBay and Paypal on-board, this opens an avenue for other competitors to do the same.
Square has already jumped on-board prior to Paypal announcing this last month. This will most likely spark more interest in cryptocurrencies as not only will it be openly traded but openly used as a currency in the E-commerce and payment space.
Big investors and companies have once again joined the fray
Although historically, so-called ‘whales’ have been the major holders of coins, we have now seen bigger names join the list.
Hedge fund manager Paul Tudor Jones has been openly proclaiming his involvement with bitcoin, stating “it’s like investing early in a tech company.” Companies like Square have also invested in the cryptocurrency with a purchase of $50 million of bitcoin in October, which amounts to 1% of its total assets.
With bigger names involving themselves in the market, this will draw more attention to other firms and companies and most likely push for a heavier investment within the digital asset.
When larger institutions invest, it opens up more opportunity and stability into the market, which is what bitcoin needs right now.
Less focus on Altcoins, a bigger focus on the major coins
In 2017, much of the hype circled cryptocurrency but also around alt-coins. Alt-coins are basically alternative coins outside the major ones (Bitcoin, Litecoin, and Ethereum).
Many new coins were popping out and raising funds through ICOs, and retail investors were getting on-board, driving the price up. Ultimately this caused the huge crash, and many alt-coins have since never recovered.
The recent hype, however, has mainly focused on the major coins. This is because much of the investment from bigger companies have been on the major coins right rather than cryptocurrencies overall.
However, overall, Bitcoin has been getting most of the attention.
Even the other major coins like Ethereum and Litecoins are still way off their all-time highs whilst Bitcoin has already reached it and going beyond. This is because funds, companies, and investment firms entering cryptocurrencies are putting their money into the market leader rather than any other coins.
Overall — the positive reception of the digital asset has led to its recent growth
With major institutions accepting Bitcoin and buying more of the coin, we have seen a much more positive reception to the digital assets. This is especially on the back of economies like the US, printing money like no tomorrow.
In my opinion, this growth is much healthier compared to 2017, which was mainly fueled by media hype. Although retail investors can make a large portion of any investment opportunity, it’s when the bigger companies and institutions get involved when the situation becomes more stable.
The coming months might be shaky territory, but we will see a greater reception to digital assets for years to come as the currency becomes more widely accepted in society.