Bitcoin Soars past $34k as Record-Breaking Rally Continues
- Comparisons made to the bull run of December 2017
Bitcoin, having flirted around the $33,000 mark for a couple of weeks at the end of last year, began 2021 with a bang, extending its record-breaking rally with a 14.73% increase on Sunday morning, taking its value at the time of writing to $34,168.
Having finally broken the key $20,000 mark just over two weeks ago, the granddaddy of cryptocurrencies ended 2020 with 305% growth, adding 50% in the last two weeks alone.
With most financial markets closed for the holidays, the focus has been very much on crypto as Bitcoin passed $30,000 on Saturday and has kept on rising since.
What Is Causing the Surge in Bitcoin?
One of two questions are being asked at the moment with the other being 'How long is it going to last?' There are obvious comparisons to the bull run at the end of 2017. Then, economist Nouriel Roubini called it a 'pure speculative asset and bubble with no fundamental value'. What followed a similar surge in prices was an abrupt crash and at least a year of consolidation and uncertainty afterwards. However, the circumstances are very different now to 2017 and here are the three main reasons why:
Institutional Investment - The involvement of institutions such as Grayscale and recently, the Rothschild Investment Corporation, has given cryptocurrency legitimacy in 2020 that it never had in 2017. Bitcoin, in particular, has seen demand grow massively from institutional investors, attracted by its supposed inflation-hedging qualities and the potential for quick returns.
Bitcoin's gain of 305 percent in 2020 compares very favourably with the 16% increase in Wall Street’s blue-chip S&P 500 stock index (up 68% from its March lows), and gold’s annual 25% rise. Meanwhile, legendary Hedge Funders, Mark Yusko and Mike Novogratz serve institutional bitcoin investors at their firms, Morgan Creek and Galaxy Digital respectively whilst top investors such as Paul Tudor Jones and Stanley Druckenmiller have thrown their weight behind Bitcoin.
Institutional Adoption - Providing confidence to investors and general credibility to Bitcoin has been the institutional adoption of Bitcoin by the Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. Read this Term industry. PayPal's acceptance of Bitcoin in October was a key moment, opening up the cryptocurrency to PayPal's millions of users. Expectations are that Bitcoin will continue its ascent in becoming a mainstream payment method.
Sergey Nazarov, the Cofounder of Chainlink, said: "People have been steadily losing faith in their government currencies for years, and the monetary policies resulting from the economic impact of the coronavirus have only accelerated this decline."
There are, of course, other factors that come into play, including the Bitcoin halving and the hopes for an ETF and a friendlier regulatory approach now that Jay Clayton, the ex-SEC head, has resigned. However, overall it is a very different playing field now than in 2017, so comparisons are limited.
At this stage, no one is sure where this Bitcoin ride is going and what is next for Bitcoin. So, whatever happens, be prepared for a white-knuckle ride in 2021.
Bitcoin, having flirted around the $33,000 mark for a couple of weeks at the end of last year, began 2021 with a bang, extending its record-breaking rally with a 14.73% increase on Sunday morning, taking its value at the time of writing to $34,168.
Having finally broken the key $20,000 mark just over two weeks ago, the granddaddy of cryptocurrencies ended 2020 with 305% growth, adding 50% in the last two weeks alone.
With most financial markets closed for the holidays, the focus has been very much on crypto as Bitcoin passed $30,000 on Saturday and has kept on rising since.
What Is Causing the Surge in Bitcoin?
One of two questions are being asked at the moment with the other being 'How long is it going to last?' There are obvious comparisons to the bull run at the end of 2017. Then, economist Nouriel Roubini called it a 'pure speculative asset and bubble with no fundamental value'. What followed a similar surge in prices was an abrupt crash and at least a year of consolidation and uncertainty afterwards. However, the circumstances are very different now to 2017 and here are the three main reasons why:
Institutional Investment - The involvement of institutions such as Grayscale and recently, the Rothschild Investment Corporation, has given cryptocurrency legitimacy in 2020 that it never had in 2017. Bitcoin, in particular, has seen demand grow massively from institutional investors, attracted by its supposed inflation-hedging qualities and the potential for quick returns.
Bitcoin's gain of 305 percent in 2020 compares very favourably with the 16% increase in Wall Street’s blue-chip S&P 500 stock index (up 68% from its March lows), and gold’s annual 25% rise. Meanwhile, legendary Hedge Funders, Mark Yusko and Mike Novogratz serve institutional bitcoin investors at their firms, Morgan Creek and Galaxy Digital respectively whilst top investors such as Paul Tudor Jones and Stanley Druckenmiller have thrown their weight behind Bitcoin.
Institutional Adoption - Providing confidence to investors and general credibility to Bitcoin has been the institutional adoption of Bitcoin by the Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. Read this Term industry. PayPal's acceptance of Bitcoin in October was a key moment, opening up the cryptocurrency to PayPal's millions of users. Expectations are that Bitcoin will continue its ascent in becoming a mainstream payment method.
Sergey Nazarov, the Cofounder of Chainlink, said: "People have been steadily losing faith in their government currencies for years, and the monetary policies resulting from the economic impact of the coronavirus have only accelerated this decline."
There are, of course, other factors that come into play, including the Bitcoin halving and the hopes for an ETF and a friendlier regulatory approach now that Jay Clayton, the ex-SEC head, has resigned. However, overall it is a very different playing field now than in 2017, so comparisons are limited.
At this stage, no one is sure where this Bitcoin ride is going and what is next for Bitcoin. So, whatever happens, be prepared for a white-knuckle ride in 2021.