Bitcoin hit its all-time high price of over $63,000 in 2021. And this prompted many investors to anticipate cryptocurrency exchanges to make their highly-anticipated debut in the stock market. At the same time, other cryptocurrencies like Ether set new records too. But, what caused this increase in crypto prices? Well, the following factors could be the reasons for the recent highs for this cryptocurrency’s prices.
Institutional Interests
Some institutions have expressed their interest in Bitcoin. Some are purchasing Bitcoin on platforms crypto trader system and holding onto their assets, hoping they will keep increasing their value. Such platforms connect cryptocurrency buyers and sellers. In addition to buying and holding Bitcoin, some institutional investors are trading this digital currency for profits. Others are investing in Bitcoin- and blockchain-based enterprises.
What’s more, surging Bitcoin features contracts hints at increasing big investors in the commodities markets. And these are speculating on the price of this cryptocurrency. Essentially, institutional investors’ involvement in activities around Bitcoin contributed to its high value.
Long View of Hedge Fund Managers
Popular hedge fund managers see Bitcoin as a long-term investment. For instance, Stanley Druckenmiller and Paul Tudor Jones II have said that Bitcoin’s price could increase due to the continued printing of money by the Federal Reserve. The government has taken this move to finance the emergency stimulus bills as a coronavirus emergency measure. And because the U.S dollar dominates Bitcoin price, an increase could be imminent. So far, the central bank has created new money amounting to $3 trillion.
Analysts Are Optimistic
Positive comments by the Wall Street analysts also contributed to the all-time high price of this cryptocurrency. For instance, Alliance Bernstein said that Bitcoin could have a role in the asset allocation for investors after the COVID-19 pandemic. That’s because Bitcoin has already established a place in the economic environment. Alliance is a $631 billion finance manager. What’s more, other experts have noted that Bitcoin’s role in hedging against government-instituted inflation could make the virtual currency compare to gold.
PayPal Acceptance
PayPal started allowing its customers to use Bitcoin on the platform. That means around 346 million account holders could use PayPal to buy Bitcoin. PayPal is a person-to-person payment network that now lets customers purchase, sell, and hold Bitcoin. This company announced that Bitcoin could become a funding source that up to 26 million merchants globally could use on the platform.
Value Storage
The COVID-19 led to job losses after some companies laid off employees and others shut their doors due to the COVID-19 pandemic effects. And this prompted many people to look for ways to earn passive income or store value. Essentially, most physical assets lose their worth during a crisis. But Bitcoin proved its ability to maintain worth with its increasing prices during the pandemic.
Consequently, many people saw Bitcoin as ideal value storage. Some people even compared Bitcoin to gold and decided to include it in their investment portfolio. Some people have argued that big crypto exchanges could outflow the market, leading to liquidations that would install selling pressure on the market. However, this has sometimes back, and the market has not experienced negative consequences.
Final Thoughts
Bitcoin’s rising price in 2021 indicates that this cryptocurrency is stabilizing. Ideally, adverse developments like rumors about the U.S Treasury Department’s plans to implement onerous regulations no longer affect Bitcoin. What’s more, many traders seem to ignore data indicating that whales could dump holdings after increasing prices. While several factors led to the all-time high price for Bitcoin, this digital currency’s value will most likely continue to grow.
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