‘Digital Gold’ ( Bitcoin ) shines in Covid too; Bitcoin at all?

in LeoFinance9 months ago

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Bitcoin, the leading cryptocurrency, has risen eight times in the past year. From a low of $ 5,024 on March 16, 2020 to a low of $ 41,530 on January 8, 2021. The total market value of cryptocurrencies has surpassed $ 1 trillion. Bitcoin prices have risen sharply since last October. $ 20,000 on Dec. 16 and $ 30,000 on Jan. 2.

The Ups and Downs Are Steep

After seeing record levels, Bitcoin plummeted. On January 10, the price was close to $ 31,000. Steep ups and downs are not new in the Bitcoin market. In 2017, after seeing the first $ 20,000 price drop, it was down 83 percent.

Guggenheim, an investment firm set up for Bitcoin investing, predicts that the price of Bitcoin will soar to the level of four million dollars. JP Morgan Investment Bank estimates that the price will reach $ 146,000.

Behind The Leap

Investment experts put forward a number of conclusions as to the rise of Bitcoin. The first is that investors in the Western world have turned to the bitcoin market. Institutions came into being exclusively for bitcoin investment.The massive influx of their money into Bitcoin has led to a sharp rise in demand for the limited available Bitcoin. The arrival of investment firms has made Bitcoin a valuable asset from the status of a 'magic currency'. There are also those who point to Bitcoin as a safe haven for the dollar.

The second factor is the massive inflow of money into the market by the central banks in the wake of the Covid19 epidemic, which has effectively eroded the value of currencies. It is feared that this will lead to higher inflation and depreciation of currencies in the future.

In such a scenario, huge sums of money flowed into assets capable of combating inflation. The sharp fall in returns from the banking and bond investment sectors also prompted the conversion to cryptocurrencies, including bitcoin. Another basis for optimism is the expectation that corporate companies will also convert profits into cryptocurrencies.

Changing Value In Availability

Many people call cryptocurrencies as digital gold . The scarcity of gold to a large extent is due to lack of availability. It is now only 6.25, up from the initial 50 bitcoins when each block was crossed.

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This means that availability will be lower in the future. The simple calculation is that the price will go up again as more and more people come in for such a declining item.

Weekend Market On The Rise

Bitcoin trading has recently become more active while other markets are asleep. Especially on Saturdays and Sundays. On January 2 (Saturday) and 3 (Sunday) of the New Year, Bitcoin prices jumped 10% and 14%, respectively.

On December 26 (Saturday), the stock had depreciated by 10 per cent. The stock and product markets are closed these days. Currency markets are also not active. One reason is that investors are attracted to the bitcoin market these days.

Another important reason is that Bitcoin ownership is limited. It is estimated that 95% of Bitcoin is owned by 2% of investors. Therefore, if these giants enter the field, there will be huge price fluctuations.

Will Value Addition Survive?

The question now is whether the soaring bitcoin price will remain at this level. No one can guarantee. With the history so far, a drastic correction can be expected. There are symptoms of it.

After a rise in the first days of January 2021, it fell by 10 per cent in a single day. Two days after the record high of January 8, prices have fallen by 20%.

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