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ATH for Bitcoin | What’s going on?

Bitcoin (BTC) has captured headlines with its soaring ascent to a new record high of $34,800 on Sunday.

Since the beginning of the pandemic, the digital coin that smoothed the path for the cryptocurrency revolution has advanced 800%. Then, on 16 December, BTC crossed a major milestone after reaching $20,000 for the first time ever.

In its 13-year history, BTC has undergone several sharp gains and drops. Take 2017, for instance: after soaring nearly four-fold in 35 days, the value crashed by two-thirds within a month.

Despite being the largest cryptocurrency in terms of market capitalisation, BTC is not yet considered a store of value as it is still extremely volatile. Having said that, many consider it to be on its way to becoming a mainstream asset, rather than simply the coin of gamers and coders.

While some traders consider BTC to be a risky asset, others view it as a safe-haven play, in the same way, that gold is often perceived.

So why did investors go Bitcoin-crazy during the pandemic?

Investors and traders buy and sell various assets, including cryptocurrencies, after some careful consideration. Here are some reasons why traders have been opting for bitcoin, now more than ever.
 

  • Some traders have enthused that Bitcoin has finally found its way to becoming a mainstream asset. Not only is the financial market embracing cryptocurrencies, but large institutional players are also eagerly welcoming digital currencies too. In fact, in May, JPMorgan (the largest US retail bank) announced that it is already processing crypto transactions on its platforms. PayPal is also opening its network to cryptocurrencies. What’s more, Bitcoin trades on numerous exchanges are in the process to go public. 
  • Governments and central banks unleashed unprecedented stimulus in response to COVID-19. Some traders see Bitcoin as a hedge against the risk of inflation caused by the response to the pandemic. In fact, Bitcoin’s limited supply – capped at 21 million – makes the top-traded cryptocurrency inflation-proof.
  • Interest in assets perceived as resistant to inflation along with the fear of a weaker dollar encourages traders to invest in Bitcoin. Specifically, Bitcoin investors consider the digital currency a better long-term investment than the US dollar.
  • Until recently, East Asia, North America and Western Europe were major centres for crypto trading, but the Bitcoin boom is also due to a shift in the market and Bitcoin hunger among bigger US investors. Although it’s too soon to speak about a fundamental market shift, it’s no secret that the crypto industry attracts US investors. Moreover, a lot of retail investors in the Asia market – many of whom caused Bitcoin’s 2017 boom – are no longer in the game.

Bitcoin’s Five Ws

Who

The original digital currency | The top traded | Still dominates the market | The world’s largest cryptocurrency by market value.

What

The first-born digital currency | Created, held and traded online | Not controlled by any central authority

When

2008

Bitcoin was born (father: unknown, pseudonym: Satoshi Nakamoto)

2010 (22nd of May)

Bitcoin Pizza Day – Laszlo Hanyecz agreed to pay 10,000 Bitcoins for two delivered Papa John’s pizzas

2017 (December)

Briefly reaching its All-time high $19,783.06

2020 (December)

Crossing $20,000 for the first time

2021 (8thrd of January)

All-time High ($41,999)

Where

Online

Why

Investors get excited by its limited supply and its inflation-proof qualities.

Bitcoin users get excited by its decentralized nature and the fact that they can exchange assets without intermediaries.


Disclaimer: Eurotrader doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information provided here, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. We advise any readers of this content to seek their own advice.

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