Bitcoin, the most important currency in the cryptocurrency market, has presented surprising growth just started in 2021; in this way, we see how Bitcoin, which became the main cryptocurrency from its very appearance, surprises the world of finance for its new price, barely the first days of the year have passed at one point it exceeded the barrier of US $32,000.
What is happening with Bitcoin?
The price of Bitcoin increases due to the increase in institutional investment and also due to the savings of the holders of the currency, among other possible reasons. As of today, January 4, the price of Bitcoin has reached $32,000; this increase places the currency’s capitalization over 595,000 billion dollars.
What is this price due to?
The uptrend of the coin is mainly due to institutional investors and small retail holders of the coin. At the end of last year, companies such as Square or MicroStrategy and funds such as Ruffer or Grayscale placed millions of dollars in Bitcoin, which at that time was about 35,000 million dollars, about 1.15 million BTC, equivalent to 6% of the capitalization of the market and the current issue of the currency. Recent studies show that only 4.8 million BTC, of the 18.5 million mined so far, are available in the market; the others are well protected in the clients’ portfolios.
Given this growing increase in BTC, it is worth asking whether this is a new investment alternative or simply a bubble, or to see how much the scenario has changed in the last three years to maintain this growth dynamic. What does seem to be true is that price volatility continues to be one of the main rules. Despite the evident instability of the currency and the risks that this entails, there are still many factors around it that stimulate this demand.
The year 2020 proved to be a profitable year for Bitcoin, especially because of the emergency caused by the pandemic, the world’s main central banks found it necessary to lower interest rates, especially in the more developed countries. They had to appeal to their arsenal of stimuli, print money, and incentivize falling consumption, injecting billions of dollars into the market. In this way, they pushed the price of the dollar down. This made the financial market more dynamic towards higher returns in stocks, on the one hand, and at the same time also towards assets considered high risk such as Bitcoin. This tendency to take refuge in gold and the dollar tends to reverse, which has been beneficial for crypto assets.
What do you think about this topic? Have you already seen the current price of Bitcoin?
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