After a meteoric rally, which took it to soar 41.6% in the first week of January, Bitcoin plunged about 20% to $ 31,300, representing a $ 150 billion valuation loss. In just 24 hours.
In the background, the doubts about whether it is only a temporary setback, a mere correction or collection of benefits after the substantial increases accumulated at the start of 2021, or whether we could be approaching a new burst of the cryptocurrency bubble such as the one that occurred in 2018.
The week starts, in fact, with a loss of capitalization of the set of digital currencies of more than 200,000 million dollars (162,000 million euros), after the market for crypto assets reached for the first time the level of one trillion dollars in the previous session.
Bitcoin’s rally, which started in November 2020, took the BTC price from $15,000 to over $30,000. The pump is still ongoing, with the price fluctuating around $34,000. If you are wondering what drives the rally, here are few reasons why the rally is on and will continue.
Raising Interest in Bitcoin
There has been a recent increase in interest rates for Bitcoin and other cryptocurrencies. This is reflected in the rise in social media activities around us. The recent increase in Bitcoin prices coincided with an increase in BTC-related tweets, according to data from TheTie. This rising interest rate may translate into more investors buying Bitcoin, which will ultimately increase the price.
Strengthening Investor Confidence
Another reason why BTC prices may continue to rise is that investors are becoming more and more confident in the future performance of assets. This is reflected in the growing number of institutions that purchase BTC. Many such institutions, including Citibank and JP Morgan, have expressed confidence that Bitcoin will rise higher and that gold, its closest rival, will suffer in the future.
Only in 2020, many corporate businesses have bought Bitcoin. These include Square, Stone Ridge, etc. This entry into the institution’s revenue will keep the number of cryptocurrencies kept informed because discovery is what gives value to digital assets. Therefore, the price of Bitcoin is likely to continue to grow as long as institutions continue to enter.
The financial generosity that we have seen from central banks and governments has eroded the value of traditional assets like cash and bonds. This shows no signs of abating, so the momentum behind Bitcoin is unlikely to fade. in the near future.
The expert points out that in the short term future “there will be volatility” , which from his point of view is natural after the gains we have seen in recent months. However, he considers the long-term trend to be clear. The crypto market is moving mainstream and more and more investors are adding exposure.
Use as Store of Value
The first acquisition was used to buy pizza, drugs, and coffee, but that has changed. Bitcoin is now considered a value store, like gold. This explains why it is called digital gold, which is the main reason why institutions take it. As a stock market, an asset can continue to grow as more value is invested in it.
Bitcoin does not have unlimited offers. There are 21 million coins that have never been mined, making it a scarce resource whose value will continue to rise as more and more people fight for it. Scarce resources are known to become more important over time, and Bitcoin is no different.
And of course, the primary use of Bitcoin is the payment method for goods and services. The growing number of consumer cases is seen as a reason why Bitcoin will continue to grow. People are trying and trying to use it on unexpected domains; not all efforts end up being popular – but that pushes Bitcoin’s popularity. Fun for another reason. One of the most widely used cases of use, which could affect Bitcoin is its use in gambling. Since the advent of online gambling, BTC has been used as the first betting cryptocurrency.
Crypto casinos, such as 1xBit, offer several benefits to those betting on the platform. They provide new users up to 7 BTC welcome bonuses for their initial four deposits. Registration is easy, without the need for KYC, which guarantees that 100% is anonymous. Along with BTC, the leading cryptocurrency payment method, there are more than 20 other currencies to choose from. This gives you the freedom to bet on the popular currency of the users. In addition, all your bonuses and rewards can be easily withdrawn from your own wallet without money.