In recent weeks, the value of Bitcoin has now been slowly rising, and on the other side, what is behind this expansion; It ignores the fact that a slew of factors are working together to hold Bitcoin’s value increasing. But, before we get into this tutorial, if you want to stay up to abreast with the current Bitcoin developments and information, like this app and learn more.
Previously, There Has Been Resistance
Bitcoin has seen volatile highs and lows for most of its existence. It hit a peak of about $14,000 in June of this year. At this stage, Bitcoin encountered a lot of resistance and was unable to overcome it. Bitcoin would have launched a flash crash if it had burst through the barrier in June. Unfortunately for Bitcoin bulls, it failed to do so, and indeed the price fell to just under $3,800, and in October, Bitcoin reached at least this level of strain, to fall. On November 4th, Bitcoin surpassed $14,000 for the first time but has since steadily grown.
This is significant since the next leverage for Bitcoin is its previous all-time high of $20,000, representing a substantial level of funding. Given that Bitcoin no longer has a possible resistance barrier until its last all-time high of $20,000, some investors believe the blockchain would be ready to recertify or even crack through that level.
The Frenzied Quest for Safe Investments in The Face of Inflation
Another aspect behind Bitcoin’s rise is the increasing appreciation of the US dollar. Even though inflation is only averaging 2% a year, recent government spending is on pace to increase inflation and erode the currency’s buying power. As a part of current deficit spending, the United States has added $2.4 trillion to the economy. Many citizens are afraid that the dollar’s purchasing ability would erode, resulting in higher inflation.
Its Acceptance as A Payment Method
Another reason for Bitcoin’s price rise is the increasing popularity of the currency as a payment method, and even PayPal (PYPL) recently announced that its consumers and merchants would be able to buy, offer, hold, and accept Cryptocurrencies as a means of payment shortly. As a consequence of this article, the value of Bitcoin immediately increased. Customers with PayPal’s almost 350 million accounts will soon be able to buy, shop, and use Bitcoin with simplicity. Upwards of 20 million retailers have now signed up to accept PayPal as a payment method.
This would have far ramifications that aren’t exclusive to PayPal. Venmo has over 40 million monthly users, demonstrating the popularity of cryptocurrencies. Regarding the fact that both Venmo and the blockchain domain are newer, there are also plenty of other applications that enable users to buy, sell, and store the blockchain. Square (SQ) and CashApp, two possibly the best competitors to PayPal and Venmo, also embrace cryptocurrency, broadening the appeal of Bitcoin.
Institutional Capital Investment
The concept of Bitcoin as a haven currency is gaining popularity, as previously mentioned. There is a growing tendency to have less capital on hand in today’s socioeconomic climate because it is less vulnerable to market volatility.
A trend has recently emerged in which publicly traded companies transfer cash in their government bonds to Bitcoin as a more stable store of value. A business research agency, MicroStrategy, was the first to convert $425 billion in funds in its account to Bitcoin. Soon after, the property was purchased for $50 million by Square, a payments company. Since then, several other companies have also worked closely.
Costs of Production Are on The Rise
Another reason for Bitcoin’s rise is because when the bitcoin population rises in size, the difficulty of mining increases, thereby increasing the expense of creating a bitcoin. Bitcoin mining consumes a lot of energy, which has a monetary cost that developers must factor into their currency value. Other hashing power targeted at mining wouldn’t increase the number of new resources because Bitcoin’s algorithm needs one block to be discovered every 1 hour on average; instead, it would increase mining difficulty. According to the study, the valuation of such a blockchain has been determined to be reasonable when calculating the marginal revenue of collection.
Bitcoin’s value has indeed been strongly matching its securities ratio thus far, but if it proceeds down this road, it may be worth about $100,000 by middle 2021.