3 Reasons For The Sharp Rise In The Price of Cryptocurrency

It would seem that with today’s changes taking place in the world, you did not even think that it would affect cryptocurrency. But everything is not so simple. Today we’ll talk about why electronic money has also undergone changes and, most importantly, why.

Where did it all begin and what is happening now?

“There was a time when cryptocurrencies were bought mainly by private investors from Asia – 2017. Now institutional investors and fairly large American and European companies are participating in the auction. Today’s growth is very different from what happened then. Recall that the cost of bitcoin was approaching the mark of 20 thousand dollars. – Chainalysis wrote in its blog.

Autumn 2020 – there is a rapid growth of quotations, in October the cost of bitcoin was about 11 thousand dollars, and closer to December – more than 20 thousand dollars. In January, quotes began to exceed 40 thousand dollars.

February – there were new course changes. Then the impact on the trading was due to the news that the car manufacturer Tesla has invested a large amount (namely $ 1.5 billion) in bitcoin and intends to accept cryptocurrency as payment. As it became known, according to CoinGecko, the share of Ethereum in the digital asset market was 18.1% at that time.

The historical maximum of bitcoin occurred on March 14 this year, the rate reached $61,620. As for the minimum local point – it was fixed at the level of $43.3 thousand, it was on February 28. Since then, it has risen in price by as much as 42%! Just think about how this affected the quotes of other digital assets: Uniswap, for example, they grew by 60%, Litecoin by 47%, Ethereum is 46%, and so on.

MicroStrategy, just recently, or rather on March 12, has already announced new investments in bitcoin. The company added $15 million to its portfolio of tokens. Now its investment in the main cryptocurrency totals $2.21 billion.

What are the main reasons why this is happening?

Here are the 3 most relevant options, in our opinion, why bitcoin and ethereum are getting more expensive:

As you know, on March 11, a new list of economic stimulus measures was introduced in the United States, due to which, just the same, Bitcoin continues to rise in price. The US and EU have decided to change their approach to stimulating their economies with additional spending. Many investors believe that too large-scale measures can weaken the euro and the dollar.

There are also fears of accelerating inflation, which may occur against the background of the money supply. Thanks to this, investment in bitcoins, the supply of which, as we know, is limited, may have increased. The main reason for the growth now is the fact that the key rate is rising, which leads to an increase in the yield of government bonds.

Coronavirus. Bitcoin rose noticeably in the March 2020 period after the outbreak of the coronavirus. A crisis that cost $1.9 trillion. He made himself known. Do not forget about the impulsive growth of the stock market, which affected the overall flow of money. Restrictions imposed by the government after the outbreak of the coronavirus have slowed down business activity. For some countries, they are still valid today.

Although not so global, but by tracking the unstable dynamics, we can note when it was better, and when we are making changes for the worse. Speaking of tracking: if you are interested and need to follow updates and news from the world of cryptocurrency, we recommend ICOholder, where it is convenient and easy enough to understand both the navigation and the essence of the operation of the cryptocurrency you have chosen.

The following pressure factors affecting the position of the cryptocurrency include geopolitical instability and increased inflationary trends in the world. The inflation rate is currently at a fairly high level. In this case, market participants redirect part of the funds to protect assets in order to save them from trouble. That is, gold, government bonds, and bitcoin, which has shown itself to be quite valuable, rely on protection.

There is also such an idea that people are simply tired of cryptocurrencies. Is it really so. Let’s break it down: for example, in November 2021, approximately 400,000 transactions were constantly performed on the Bitcoin network, and this year these figures have dropped to 275 thousand and continue to drop. Today, the situation is such that ordinary users are inactive, and traders are still trying to make money on exchange rate differences, as it was in mid-2021.

Conclusion

Bloomberg notes that questions regarding the value of the cryptocurrencies themselves are still relevant today. Some experts are even considering whether bitcoin can even hold its value and stay on the market.

As for expectations regarding this goal, we can say that Ethereum’s main network is expected to merge or dock with Beacon Chain. If this still happens, then we should expect the end of cryptocurrency mining. This will be followed by a transition to more energy-efficient staking.