One of the most volatile financial markets is the one trading with cryptocurrencies. The volatility and wild fluctuations can cause significant profit and immeasurable loss to traders. Really, you have to have that kind of determination to ride out the corrections and crashes.
Since the worst crash of Bitcoin in 2017, it was slowly but steadily rising back up again. At the time, the Bitcoin price had reached a new high peak of $19,783 until it all came crashing down.
However, amidst the coronavirus and various other factors, Bitcoin has shown significant rise and fall in its price. By now, it is evident that change in DC politics can influence the price of Bitcoin massively.
For instance, Bitcoin reached a new high on Sunday at $58,354. However, just a few comments of Janet Yellen, the US Treasury Secretary, made a significant impact. On Monday, the price drastically fell to $47,400. Fortunately, by the end of the trading day, it had recovered to $54,385. As of right now, it is going at $48,357 with a change of -9.77% in 24 hours.
Why is the trading of Bitcoin at its highest at this time?
Despite the erratic behavior of the Bitcoin price, there seem to be heavy volumes of tradings on a daily basis. There are multiple factors that can play a role in enhancing the level of Bitcoin trading now. Take a look at the reasons why.
One of the main reasons that you can link to the high trading levels of Bitcoin right now is the rising popularity. Cryptocurrency, especially Bitcoin, is finally gaining the recognition it deserves. The investments of institutional investors have changed the game completely.
It was MicroStrategy that first pushed Bitcoin into the limelight once again. The company purchased Bitcoins worth $425 million. This inevitably caught the public’s attention. In a way, it also helped the everyday traders to view it as a viable asset.
The next move was done by Square, just on the heels of the enormous purchase of MicroStrategy. Square invested a total of $50 million in Bitcoins. After that, PayPal entered the market and kind of changed it completely. Now, Bitcoin has far more reach than it had earlier.
- Limited amount
Launched in 2009 by a mysterious entity Satoshi Nakamoto, Bitcoin has held the interest of the world from the very start. The foremost thing that makes it different from fiat currencies is its limited quantity. There are a total of 21 million Bitcoins only. After all of them are bought, you cannot code in anymore. Right now, the circulating supply is 18,636,293.
Approximately 10% of it is left. Experts predict that the mining of the leftover 10% will take about 120 years. Though the amount of Bitcoin is in millions, the fact that it could not exist has people in a frenzy. It’s simply FOMO (Fear of Missing Out) at its highest.
The perceived notion that there will be a shortage soon has boosted the Bitcoin trading levels tremendously.
- Backed by celebrities and brands
For a long time, Bitcoin and other cryptocurrencies suffered due to the lack of institutional approval. With some countries banning its usage, naturally, traders were wary to trade in this virtual currency. However, the new-found acceptance of several brands, personalities, and institutions has made a positive impact on the Bitcoin tradings.
Recently, PayPal has entered the world of cryptocurrency and immediately cause a hike in its price with the press release. Now, you can purchase, sell or even hold Bitcoin through your own PayPal account. Not only Bitcoin, but it is also applicable to some other digital currencies a well. Moreover, users can now use these crypto coins to purchase from the 26 million merchants that use PayPal as an integrated payment system.
Tesla recently bought Bitcoins worth $1.5 billion, which increased the Tesla stock value as well as the Bitcoin price. Moreover, Elon Musk, the CEO of Tesla, Inc., has been very vocal about his support from his tweets.
Moreover, there are different celebrities that have either bought Bitcoins or endorsed them. Even thinking of buying it could influence the Bitcoin prices. Some of these well-known personalities that shared interest in Bitcoin tradings are Maisie Willaims, Meek Mill, Paris Hilton, Mike Tyson, Lionel Messi, etc. The list is a long one and definitely helps in the increased Bitcoin trading levels.
- Combats against inflation
It is truly the vicious pandemic that has raised the awareness for hedge assets even more. At first, the effect of the deadly coronavirus did not affect the price of Bitcoins. However, the health crisis and the inability of the government to contain its successfully caused global financial crises. This has ultimately been a boon for Bitcoin prices. They hiked up as more and more people were trying to trade in it in an effort to fight against inflation.
Moreover, the influx of currency from the government and several other factors also had a great influence. Another factor that drew more people is the fact that Bitcoin is limited. After all of it is mined, no more can be created. Furthermore, decentralization and enhanced privacy made the change towards token assets even more appealing.
A little advice
While it is true that the Bitcoin trading levels are high right now, you must exercise caution. You definitely must not put your entire life savings on the line. Keep in mind that the Bitcoin price can drop sharply causing a substantial amount of loss. Moreover, you must also be wary of scammers and fraudulent activities. Platforms such as the news spy helps to get better hold of bitcoin related news and making informed trading decisions.
These are some of the reasons that have caused a surge in Bitcoin tradings these days. Though the crypto market is extremely volatile, you can still make a substantial amount of profit. However, for that, you will need to research the market and develop an efficient trading strategy.
Keep in mind that there are high chances that Bitcoin and the cryptocurrency market will only get bigger. But, it could also diminish if the hype does not remain. The best bet is to research extensively and then place the right foot forward!