Currently, the crypto market is booming because of its rising popularity as an investment asset in the financial market. It is a fact that almost every investor has added cryptocurrencies like bitcoin to their investment portfolio. Platforms like investment in cryptocurrency help you to learn how to trade without any help from expert trading and keeps you away from copy trading, and you can master bitcoin trading by visiting such websites. Bitcoin is nothing but a digital currency that allows online users to perform online transactions without any involvement of any central bank.
It is a digital currency that utilizes an open ledger system to store transaction history and uses cryptographic techniques to validate new transactions and create new bitcoins. Each transaction generates an open ledger known as the blockchain, which records all transactions made using bitcoin.
It is updated by a network composed of users who collectively verify and corroborate the details of each transaction. The bitcoin system uses cryptography and mathematical algorithms to process the pieces, which are then stored in the blockchain. So, it is a decentralized currency where no government or central banks can control its flow or value. This article will explain the reasons behind the skyrocketing rate of bitcoin.
Institutional Adoption:
The total number of hedge funds has reached a staggering 6,172 as of 1st July 2017. This report predicted that there would be an overall increase in the value of cryptocurrencies and the numerous crypto investments made by various institutional investors. After a period of decline from 2014-2016, institutional investment has seen a sudden spike within the current year. It has raised concerns that bitcoin’s rapid rise in value has been due to an influx of institutional investment.
With a surge in adoption, the markets have grown, and consequently, the price of bitcoin has skyrocketed. Institutional investors also fund businesses to develop and nurture their growing companies and reduce risk. Also, they are under pressure to include cryptocurrencies within their portfolio, which usually offer higher returns than other alternative investments like stocks.
Bitcoin Halving Driven Scarcity:
To understand the reason behind the current volatility of bitcoin, it is essential to understand the halving process. The hard fork that took place in August 2017 was a result of a disagreement among developers over a halving. After the separation, bitcoin miners are allowed to add twice as many transactions to each block compared to what they previously did. It is also called halving since time goes faster for miners with each block mined. Among other factors, this decision led to the bitcoin price going up by more than 20%.
Another major contributor to the volatility of bitcoin is its market supply. There is a total cap of 21 million bitcoin, which people can mine in their lifetime. As per estimations, about 16.7 million bitcoins have been mined till now, and only 5% or 2,081,037 bitcoins are left to be mined. However, the mining process is a difficult task, and it also requires expensive mining hardware, and it will become even more expensive when the new block increases the remuneration.
Easy Accessibility To the Public:
The only thing which people can do with bitcoins is trade. They are undoubtedly volatile, but they are available with any technology, making it easy for people to get hold of them and trade them. Although bitcoin is far from being a mainstream investment, many people have been buying and selling bitcoin daily, as it has been becoming more and more popular among people all over the world.
Its price is tied to its demand, and since there is not enough supply, the value will skyrocket when its value rises. Although it has seen highs and lows before, recently, bitcoin has seen a high rise in its price, and everyone’s attention is on this digital currency. With the increasing amount of people trading bitcoins comes a rising amount of altcoins using their blockchain technology to create their cryptocurrencies.
Bottom Line:
The price of bitcoin is the increase in institutional investment and the limited supply. Although bitcoin has seen highs and lows in the past, lately, its price has been on a high rise. Till now, Bitcoin is one of the most critical factors in the cryptocurrency market, as its trading price has been increasing daily with tremendous speed. Bitcoin is also one of the biggest holders of market capitalization, and we’re pretty sure that it will keep growing until it reaches no limits…
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