5 Possible Factors behind Bitcoin’s Staggering Price Rise
Despite being considered one of the most volatile digital currencies in the world, Bitcoin has survived several market crashes and emerged as the most valuable cryptocurrency of our time. Covid – 19 Pandemic, geopolitical tensions and global economic slowdown are some of the factors that have recently impacted the value of cryptocurrencies around the world.
It seems that Bitcoin is untouched and unharmed by the negative factors that have wreaked havoc on global economies. The value of the cryptocurrency market has touched the 1 trillion mark, and Bitcoin is responsible for nearly 70% of the entire market capitalization.
Since its launch in 2009, Bitcoin has tendedto beat the odds and survive multiple fatal crashes. Even in 2022, the world’s most valuable crypto is marching higher to maintain its superiority in the market of cryptocurrencies.
If you are a novice investor, Bitcoin’s staggering growth may surprise you a lot. Well, let us simplify the matter. Here, we will highlight 5 possible factors behind Bitcoin’s astounding growth story and explain how these driving factors continue to make the digital currency go up in value.
A Safe-Haven during Inflation
The growing inflation of the USD forced the government to announce a lump sum stimulus package, which led to a sharp fall in the dollar’s purchasing capacity. During the recent inflation, the dollar has witnessed a decrease in its value. This has discouraged millions of investors worldwide from investing money in the traditional market.
Many have shifted their focus from the traditional market to virtual assets. Bitcoin has evolved as one of the safest assets to spend during inflation. For investors, Bitcoin is less volatile and untouched by rising inflation.
Mainstream Adoption
The acceptance of cryptocurrency within the mainstream market is another reason why the value of Bitcoin is constantly rising. You will be wondering to learn that cryptocurrency is being accepted more rapidly than the internet service was in the 1990s.
Bitcoin is now a part of the online payment method. Popular payment gateway PayPal has recently announced that it may soon allow its users to accept, buy and sell Bitcoin and other famous cryptocurrencies. More than 350 million people worldwide use PayPal, and now they can deal with Bitcoin on their favourite platform.
Institutional Adoption
Since Bitcoin has gained a lot of trust among investors, especially during inflation, it is now considered a stable investment against market swings. Multiple public and private organizations have recently converted their physical assets such as cash treasuries into virtual currencies.
Famous American payment company Square has recently bought Bitcoin worth more than USD 50 million. Following this, active public listed company Micro strategy converted cash reserves with Bitcoin worth USD 425 million. The development encouraged more organizations to trust in cryptocurrencies, especially Bitcoin.
Increasing Cost of Production
The mining network of Bitcoin is constantly growing, and the increasing cost of production is one of the driving factors behind the Bitcoins price rise. As the mining network mounts with time, the mining process gets tougher, which, in turn, raises the production cost. For fast and safe Bitcoin trading..
Bitcoin mining is a highly enegery consuming process. So, mining cost is an influential factor contributing to Bitcoin’s overall market value. The volume of Bitcoin’s mining network will also influence Bitcoin’s market value in the future.
The number of Bitcoin in Circulation is Limited
The limited quantity and controlled supply of Bitcoin makes it one of the most trusted cryptocurrencies in the world. Even though miners have been working to produce new Bitcoins, the number of Bitcoin in circulation will never cross 21 million marks. This comes as a guarantee for investors searching for an ideal store of value.
Some experts believe that Bitcoin is a deflationary digital currency. Even if the number of Bitcoin in circulation does not increase, its demand will continue to fuel its value. However, some argue that since Bitcoin features an inflationary mechanism in its code, also known as the reward system, investors should not see it as a deflationary asset.
Conclusion
These are the five key driving factors that weigh the value of Bitcoin. Besides, Bitcoin’s rising popularity and immense demand contribute greatly to its market value. Large-scale adaptation, previous resistance and trust have also driven investors to rope in Bitcoin as a haven against inflation and market swings.
