Bitcoin, like other cryptocurrencies, has an extremely volatile market. The fluctuation in price has been attributed to many things at the forefront of which is the force of the demand and supply in leading exchanges such as Coinbase and Binance. However, due to the decentralized nature of the digital asset culminating in a general lack of regulation from any central bank, the price of Bitcoin is set to remain inconstant.
In April 2021, Bitcoin rose by about 450 percent and sold for about $65,000 in most major markets. As the price was unprecedented, most reports referred to it as Bitcoin’s all-time high. The sudden price increase was attributed to the announcement of Tesla to accept Bitcoin as a means of payment for vehicles made by the fortune-500 company. In addition, other external factors like the hype around the cryptocurrency and the support given by CEOs such as Jack Dorsey of Twitter and celebrities like Jay Z to Bitcoin may have propelled the price forward.
However, the crypto asset took a massive dive at the end of May by 30% before it reduced to 12% on the same day and by mid-July, its price was halved and has gone down as low as $30,000. Again, market experts ascribed the major dump to China’s clampdown on cryptocurrency mining. Furthermore, Tesla’s retraction of their earlier statement to accept Bitcoin as a means of payment citing “increasing use of fossil fuels for Bitcoin mining” as the reason for the reversal, also contributed to the fall in the price of the cryptocurrency.
Surprisingly though, Bitcoin has seen a significant price rise. Similarly, other crypto assets like Ethereum (ETH) and even the popular meme cryptocurrency, Dogecoin that follows the rise and fall of Bitcoin to determine their price has continued to move upward as well. Five months after the massive dump and cryptocurrency continues its upward surge.
As of the time of writing this article, the price of Bitcoin stands at $66,437.68 on the Binance exchange and continued its steady increase.
The price of Bitcoin is currently driven by the following:
The Adoption of Bitcoin as a means of payment by major companies
Bitcoin was introduced to ease transactions processing without concern for stringent government policies. However, most early adopters of Bitcoin mostly use it as a form of investment that can be bought when the price is low and sold after a price increase. However, many fortune 500 companies and small businesses now see the potential of using Bitcoin as safe and secure means of payment, and the increase in demand has propelled the price up. Microsoft adopted Bitcoin as a means of payment for its game and apps in 2014 and this has paved the way for many other companies to follow suit. In the same year, PayPal, Expedia, Dell, and Dish Network accepted Bitcoin as a means of payment. Fast forward to 2021, Bitcoin has remained a viable means of payment even for small businesses despite its volatility.
In November 2012, the first halving of BTC occurred, reducing the reward for mining by half as more BTC are mined. Since then, the cryptocurrency has witnessed two more halvings and will continue to be halved. There is a limited amount of 21 million BTC that can be mined and each halving contributed to the mining of 21000 blocks. Bitcoin halving has contributed to a major price increase. As the last Bitcoin halving occurred in May 2020, experts have suggested that there is a correlation between Bitcoin halving and the price surge. Irrespective of this, the scarcity of Bitcoin is one of the major contributors to its price increase.
The amount of Bitcoin held by many companies has risen significantly in recent years. For instance, Microstrategy recently converted its cash into Bitcoin by holding 100,000 BTC which is equivalent to 90 percent of its treasuries. Other companies such as, Square of Jack Dorsey, Galaxy Digital Holdings and Tesla have major stakes in Bitcoin. The unprecedented rise in the price of Bitcoin is buoyed by these companies.
Easy accessibility of Bitcoin to the populace, introduction of Bitcoin ETF and the anonymity Bitcoin provides to users are some of the reasons Bitcoin continues its upward trend.
According to Independent, the overall crypto market is currently valued at about $2.5 trillion and still continued its upward climb. Bitcoin market capitalization stands at $1.253 trillion and the price is about $66,000 but experts at Fundstrat Global Advisors predicted that Bitcoin might maintain its upward trend to reach a record high of $168,000 by the end of the year 2021. However, the volatility of the market still remains. Who knows? There might be another plunge in price before the rise. Check out here for more.
Bitcoin is defined by its volatility just like other cryptocurrencies. However, this continued increase in price is historic and might last longer than ever before.