Bitcoin, the first and most popular cryptocurrency of the world is again in the headlines as it is witnessing a remarkable spike in its price and acceptance. Bitcoin is coming out of the period of volatility and disbelief after the years of experiments and doubts.
The current year has witnessed Bitcoin’s price rising gradually, it recently crossed $57,000 and is closing in on its record high. This sort of price appreciation has been as a result of a number of factors such as; increased institutional investors, the growing number of retail investors and a developing regulatory framework.
Another factor that can be considered as one of the most important trends that contributed to the growth of Bitcoin is the entry of large financial companies into the cryptocurrency market. Tesla, MicroStrategy, and Square are some of the corporations that have now included Bitcoin in their financial statements, they consider it as an inflation hedge and currency protection.
This corporate adoption has given Bitcoin a new level of acceptance by the traditional investors in the corporate world. The introduction of Bitcoin ETFs in a few nations has also increased more opportunities for institutional and retail investors to invest in the asset.
These ETFs enable investors to invest in Bitcoin without having to deal with the issues that come with directly owning and storing the asset. This has led to an influx of new capital into the Bitcoin market, which has led to growth of prices and reduction in price fluctuations. As for the legal sphere, Bitcoin has achieved great progress in the recognition of authorities and financial services.
Many countries have set up policies on how to deal with cryptocurrencies in terms of taxation and trading, which has brought a lot of relief to companies and persons involved in the market. Although there are still some barriers, the general tendency has been more Bitcoin’s acceptance in the existing financial frameworks.
Technology behind Bitcoin has also advanced to ensure that some of the issues of scalability and efficiency that affected the network in the past are solved. This has been enhanced by the application of enhancements such as SegWit and the continued development of Layer 2 solutions such as the Lightning Network.
These technological developments have strengthened the belief of Bitcoin as both a store of value and a medium of exchange. In particular, the adoption of Bitcoin has grown significantly with the increase in the price of the cryptocurrency. Bitcoin has received extensive coverage in the media with more and more traditional newspapers and magazines providing their readers with information on its price fluctuations and increasing usage.
It has also brought forth a new generation of retail investors interested in the digital asset, primarily because of its value as an inflation hedge. The coronavirus outbreak and subsequent government stimulus measures have only increased people’s fear of the stability of traditional currencies, thereby increasing interest in Bitcoin.
However, the Bitcoin has not come back to the market without controversy. Politics of energy consumption of Bitcoin mining have emerged, and this has created controversies on the feasibility of this currency in the future. While the debate on the future of Bitcoin is still ongoing, some economists have expressed their concern about the speculative behavior in relation to the Bitcoin and its price being in a bubble.
Nevertheless, the general trend of Bitcoin remains higher. With increasing adoption by the general public and with the advancement in technology, bitcoin is solidifying its status as an actual asset class. It remains to be seen whether it will become a fully-fledged global decentralized currency, but there is no doubt its influence on the finance industry.
To date, the worlds oldest and most successful cryptocurrency, Bitcoin, is now in its teenage years and has been shown not to be just a craze. Given the fact that the asset has stood its ground against numerous challenges and garnered the interest of serious institutions it will undoubtedly remain a significant player in the financial space for years to come.
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