Bitcoin has returned to its upwards rally towards the end of last year.
There have even been rumors that BTC might climb up to $1 million and even $3 million per coin by the end of this year.
One thing we need to understand is that the cryptocurrency market is really volatile and as you read this article, the prices might even change during this time.
There have been instances, like back in 2017, when the bitcoin performed tremendously well. However, the market witnessed the bubble bursting after the rally ended.
People have been speculating that this rally might be similar to that and that this bubble will also burst sooner or later.
However, we believe that this rally might be different than the previous ones, as to justify our stance, we have identified the following three ways we believe its dissimilar:
1. The Fintech Revolution
The foremost factor is the influence of the global pandemic, coronavirus, on the economies as the governments are creating and circulating an increasing amount of money into markets. The investors have thereafter been more interested and inclined towards other non-conventional financial assets to invest in, besides the usual savings, properties, bonds and stocks.
Post the global pandemic, there has also been a rise in cashless payments and e-commerce, causing an increased interest and attention towards digital money.
Digital Currencies are also turning handier via “stablecoins”, which have amounts pegged to the fiat currencies, such as US dollar etcetera. Digital and cold wallets are also becoming increasingly popular as they are increasing the convenience.
There are signs which are signifying that these developments will converge. One of the most renowned payment platforms such as PayPal has introduced the service which allows users to purchase BTC via it, and they have also signaled towards the introduction of other services which will allow users to make payments with Bitcoin next year.
2. Development of Technology
The second factor is that the technology is progressing and improving day by day in the crypto market.
A relatively great amount of energy and resources needed to securely execute the extensive computing processes of crypto has been identified as a prominent problem in making digital currencies, such as bitcoin mainstream. A very huge amount of carbon emissions has also been recorded and reported due to the mining of BTC.
Newer technologies are being created to enable blockchain technologies to be utilized in the markets. The Bitcoin Code is one of the leading technologies in the crypto market, as they use bots and auto crypto trading based on advanced AI to generate profits for the users.
3. Increasing Acceptance Among Big Entities
While discussing the third factor, we will shine light upon the recent events of how the perception of JPMorgan Chase, the leading institutional investors, has changed regarding digital currencies, bitcoin in particular.
Other examples of big names participating in the bitcoin fiesta include a renowned cryptocurrency asset manager in the United States, Grayscale Investments. Their investment in the cryptocurrency surpassed the $10 billion mark during the previous month. Another big firm, Guggenheim Partners, a big asset management and global financial services company, revealed their intention of investing a figure of almost $530 million in BTC via Greyscale.
An increasing number of market analysts and experts are now believing that the cryptocurrency is not likely to perish, and will stay in the world for a long term.
Should You Purchase BTC?
Therefore, what does this signify if you want to become a retail investor in the future? Can you make a fortune out of this investment similar to the individual who invested $3,000 in BTC, and converted them into $25,000,000? In reality, the chances of making this huge of returns is low, given other factors.
We can understand that this individual invested in bitcoin when its prices and cost of investment was very low, and a cloud of uncertainty and risk hovered over the crypto market. It was this great risk which earned this individual the highest gain. Given that a majority of the BTC have been mined now, the only opportunity left for investors and traders in the crypto market is to purchase it at lowes and sell at highs to make profits.
The digital currencies have shown to be very speculative and fluctuating digital financial assets. While some have gained from them, several others have also taken home losses with them.
However, this time, things might be different and the BTC bubble might not burst. This is mainly due to the increase in acceptance of adoption of crypto such as bitcoin among investors and big firms, and crypto becoming a stronger asset.
But then again, no one is certain, neither about the success nor about the collapse of BTC.