By Tanuja A Akkannavar
For the first time on Tuesday, Bitcoin rose above $50,000, adding steam to a rally fueled by signs that mainstream investors and businesses are gaining acceptance of the world's biggest cryptocurrency. Bitcoin hit a record $50,603 and at $48,351 it was last up 0.83 percent. So far this year, it has risen by around 67 percent, with most of the gains coming after electric car manufacturer Tesla said it purchased $1.5 billion in bitcoin.
Due to the global pandemic causing havoc on all significant economies, the cryptocurrency market has witnessed a considerable boom. Throughout this pandemic, many bitcoin businesses have flourished in market space to add value to the ever-increasing demand for Bitcoin and similar cryptocurrencies. But what motivates this growth? It appears that there is a huge spectrum of variables that tend to increase the value of Bitcoin.
1. Institutional Adoption as Payments –
Cryptocurrencies are now considered the safest resource towards economic uncertainty and currency devaluation, especially Bitcoin. The economic and social condition often produces a situation in which people are able to carry reduced cash and avoid market fluctuations. This practice has since been adopted by several businesses. As a currency and value shop, business entities' confidence in cryptocurrencies has added more merit to it.
2. Inflation –
The destruction carried out by COVID-19, this has contributed to massive economic stimulus from governments of various countries and many central banks printing more currency. This could push up inflation, which in turn reduces the buying power of people. Many have withdrawn from the currencies to protect against this increasing inflation and have taken shelter in assets that have traditionally held value or even appreciated in value. Assets that people turn their currencies into to escape inflation or volatile markets are usually scarce or relatively less volatile assets. These 'safe-haven' assets include items such as precious metals, stocks of less risky industries in general, and Bitcoin, more recently.
3. Easy Accessibility –
Cryptocurrency is a digital currency, a real worth and exchangeable, while it has just begun to generate leads as a legitimate method of payment, and over past several years, it has developed itself to be a new financial asset. Even though the consumers are reluctant to use it for payments, many would like to switch their cash into bitcoin since they believe it is a smarter form of currency and reserve currency because of its deflationary presence. In India after the lifting of the RBI ban on cryptocurrencies, its investors experienced a significant increase.
4. Halving –
The third bitcoin halving occurred this year, in the Bitcoin system that occurs every four years, Bitcoin halving is a significant occurrence. The Cryptocurrency works while a process called Bitcoin mining adds new bitcoins to the market. This mining is achieved by Bitcoin miners through checking blocks of Bitcoin that are essentially groups of Bitcoin transactions.
5. Maturity –
Bitcoin has come a long way since its release in 2009, from its initial primary use to a modern monetary medium that offers demonstrable scarcity and absolute transparency with its immutable ledger. It was still almost difficult for the average citizen to get interested in previous years, even after the realisation that Bitcoin and its blockchain technology could be used for much more than just the silk path.
If the rising prices on the crypto market have made you think that investing in cryptocurrencies is too late, realize that this is just the start. Cryptocurrencies will become mainstream as more countries aim to control the market.