Guides & Explanations

Why is Bitcoin price rising?



In May of the present year, a new Bitcoin Halving occurred. Before it, economists and traders had different opinions on how the Bitcoin market was going to react to it.

Some thought that reducing the amount of Bitcoin that miners would obtain while spending the same time and effort than before would make it non-profitable.

It became one of the biggest fears of the investors, who started to look for other cryptocurrencies that could need a lesser amount of work and investment to gain from it.

However, other economists foretold that, as it has happened on the previous Halvings, the value of the Bitcoin will instead rise after the first months.

It comes with no surprise to them that, indeed, the price of this cryptocurrency is going up and will reach unexpected value before the year ends.

Still, some of the events in this year were not anticipated, which makes people ask themselves what has changed.

A complicated year

In March, COVID-19 affected the entire planet, causing the governments in all countries to create measures to protect the citizens.

Between those measures, they decided to stop production of many companies and apply a lockdown, which led to a change in the world’s economy, as people couldn’t go to work and many stores had to close.

This event also affected the cryptocurrency market, as people started to give more priorities to other things to keep at home and safe during the pandemic.

Bitcoin had a significant crash on those days. The Coronavirus appeared just a couple of months before the Bitcoin Halving of May.

It was the third time that the number of Bitcoins that people would receive while mining was going to be reduced by half since its appearance in 2008, the other two Halving events occurred in 2012 and 2016.

It was established that there was going to be a finite amount of Bitcoin active in the world; once that number is reached, there won’t be more mining.

To extend this time, the company related to Bitcoin decided to apply the Halving every four years.

As the Halving date was getting closer, people started to save their Bitcoins.

The Bitcoin market lowered with hopes that after May, the price would go up very quickly. Suddenly, the COVID-19 appeared along with the lockout. The crash was more significant than expected.

Then, how comes that Bitcoin is now over the 10.000 USD and increasing?

A bright future for cryptocurrencies

The lockout, which at the beginning brought many problems in the financial world, also gave people a new point of view on digital currency and other benefits from online transactions.

People started to make their purchases online to avoid leaving the house, and those stores with online options for their customers suffered less from the problems that the COVID-19 measures brought.

This event highlighted the importance of counting with a currency that can be used in any country without having to depend on bank entities and the tax fees. The main reason why cryptocurrency was still in consideration was that it fluctuated and is not stable yet.

With the lockout, it was evident that most of the bank entities couldn’t offer their services to the people as effectively as they wished. People weren’t able to have access to their money, even if they had it.

After this event, and seeing that the COVID-19 problem is still around, new measures are being considered. One of them is that bank entities will start accepting cryptocurrencies in their system. This decision opens the race to what cryptocurrencies are going to be considered for this new digital era.

Bitcoin, the leader in cryptocurrency

Bitcoin is the first cryptocurrency that appeared, and it is also the most valued ones today. It is the third asset with most investments behind gold and oil in the market. Those behind this cryptocurrency keep improving in new security measures and ways to have access to the Bitcoin easier than before.

They have allied with relevant bank entities like Visa to create Bitcoin debit cards. This tool can support the cryptocurrency and will allow people to use them in different countries without having to change their local money for the currency of that country.

Although many cryptocurrencies are also getting recognition during these dire times, Bitcoin stays on top as talented traders, investors, and companies are investing in it for the future.

The differences in the prices between Bitcoin and the second-best cryptocurrency, which is Ethereum, are vast. The rest of the cryptocurrencies has it hard to dream of getting close to the value of Bitcoin.

Conclusion

The digital world is becoming more significant as time goes by. The Blockchain technology offers an opportunity for people to mould a new financial system that can benefit everyone without depending on third parties to make transactions and manage their money.

For this modern era, there has to be a new currency, which makes Bitcoin a potential main currency to start these projects.

The decisions of the bank entities about accepting the digital currency give the first steps to transform cryptocurrencies into a reliable option, allowing it to reduce the volatility that is frequent on these digital coins. It also provides an improvement in the security of the management and the holding for the cryptocurrencies.

Although there are many options in digital wallets and great platforms that offer these services, the aval that a renown bank entity can give to the digital currency helps to transform it into a stable currency.

That way, it will be more taken into consideration by significant companies that so far have been relentless on accepting the Bitcoin and other cryptocurrencies into their finances.

However, investors must be careful about how things may change in the following months.

Even though the numbers are positive in the current days, and that it would seem that Bitcoin will keep going up, the probabilities of a second lockout before the year finishes may bring another crash on the Bitcoin market.

Image by Ricardo Goncalves from Pixabay



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