Have you ever wondered why the Bitcoin has become a name to reckon with? The truth is with the Bitcoin prices hovering around $51,202 in March 2021, companies like MasterCard have declared new Bitcoin initiatives. This announcement follows Elon Musk’s declaration that Tesla has bought $1.5 billion Bitcoins and will start accepting Bitcoin payments shortly. It is interesting to recall here that Bitcoin prices had been slightly short of $10,000 just a year ago.
The spike has been incredible to say the least, but it is important to know reasons why the Bitcoin has been steadily climbing the popularity charts. Bitcoin has actually grown from what critics had once denounced as a scam to an asset that has become a viable investment option, made popular by billionaires and retail investors.
Why Is The Bitcoin Growing Popular?
- There are plenty of assets that are regarded as store-of-value; usually, this refers to precious metals such as gold that have limited supply. While gold may be scarce, we cannot say how much of it exists with full certainty. This is where the Bitcoin is different. Bitcoin has a finite supply; there can only be 21 million Bitcoins and not anymore.
- Big companies have started to buy the Bitcoin and this has been a leading cause for its popularity. The fintech giant BNY Mellon is one of the most recent investors to adopt Bitcoins. MasterCard has declared that it would process Bitcoin payments to provide customers and businesses with better buying choices. And also the automated trading apps have been contributing the rise trade volumes. Visit https://coincierge.de/bitcoin-trader/ to learn more about how the automated trading app function.
- Investors are viewing the Bitcoin as a hedge against inflation. With the pandemic spreading to European countries and the US, governments started to impose lockdowns for limiting its spread. This however hampered economic growth and triggered a global recession. As a result, central banks have stepped forward to support their national economies. So, hedge fund biggies prefer to buy Bitcoins anticipating the rise in inflation.
- In October 2020, PayPal declared that it would allow its customers to buy, store, and sell cryptos like the Bitcoin and even make purchases using the Bitcoin across almost 26 million businesses. This and similar developments have shown a gradual institutional acceptance of the Bitcoins and cryptos in general.
- According to a Citibank analyst, Bitcoin prices may touch $318,000 towards end of 2022; this can be compared to gold’s meteoric rise in 1970. Part of Bitcoin’s appeal can be attributed to its use as a hedge against inflation. According to a Duke’s professor, gold will possibly retain its value in the long term but it may continue to be unpredictable and volatile in the short term. The Bitcoin network may currently store only $350 billion which is much smaller compared to trillions of dollars in gold. It is believed that Bitcoin has a lot of room for growth compared to gold and this crypto will attract big investments looking for high returns.
- The Bitcoin halving is another cause for its popularity. Every 4 years Bitcoin value will be halved; in short, the rewards given to miners for processing transactions will be halved. Currently, there are 18 million Bitcoins and with every halving, its stock-to-flow ratio increases. Traditionally, every such halving episode has gone through a bull market which has crushed its earlier all-time high. The 3rd halving happened in May 2020 and prices have shot up by 120%.
- Finally, accessing the Bitcoin today is a cakewalk. With the growing number of licensed and regulated US exchanges, Bitcoin can be traded by even the least tech-savvy people.