As Bitcoin rose above the $11,000 mark recently, every investor – especially those who had actively propelled Bitcoin’s market cap to over $200 billion over the years – believes they are getting the better end of the deal. Bitcoin is mooning again and most people are wondering why.
There is more to this cryptocurrency than it seems: it has evolved into a gargantuan meeting point for early birds and latecomers from all over the world, thanks to a series of events that gathered momentum, captured the global attention and led everyone to the realization that cryptocurrency is here to stay and eventually, it will be as indispensable as fiat currency.
Here, we list out the series of events that propelled Bitcoin’s rise:
1. Crypto has gone mainstream thanks to Facebook
The world’s most famous cryptocurrency benefitted from Facebook’s Libra announcement, evidenced by Bitcoin’s steady rise in value this week. Crypto experts believe that the social media giant’s announcement actually prompted mainstream interest into cryptocurrency and its underlying Blockchain technology.
Analytics by The TIE, a crypto analytics provider, stated that Bitcoin (BTC) was boosted by fundamental news. The Libra Coin announcement played a massive role in driving Bitcoin to $10,000. After Facebook’s official partners list for Libra Coin was revealed on June 14th sentiment on Bitcoin almost immediately flipped positive leading significant upwards price movement.
2. Institutional Investors are now fueling the growth of Bitcoin
The market seemed to have shrugged off the time when Bitcoin’s bubble burst in 2019 after it catapulted to a record high of over $19,000 in December 2017. Back then, the price tumbled and plummeted over the course of 2018, before arriving at a low of $3,000 in early 2019. Fast forward till today, the market is abuzz with a bullish sentiment on Bitcoin and the wider crypto market.
Wealthy family offices that represent high net worth individuals make up the institutional investors that want ways to invest in crypto while still being covered by the same protections offered by more traditional markets. They could not help but notice the growing mainstream acceptance of cryptocurrency, and they want to be part of it.
“The market has matured to the point where it is now an attractive investment proposition for mainstream institutional investors,” says Ville Oehman, fund manager at Helvetic Investments. He’s right. Just look back at June 17th, when open interest at CME Bitcoin Futures saw 5,311 contracts totalling 26,555 BTC or $246 million. It dwarves the volumes in the 2018 price peak.
3. Investor sentiment is positive
Crypto market sentiment measure, Sentscore echoes this rising investor confidence because Bitcoin is now holding the number one spot among the top 10 cryptocurrencies by market capitalization. It is also the only coin in the positive sentiment zone at 7.6/10.
Positive investor sentiment has traditionally driven up stock prices, it is no different when it comes to cryptocurrency investments. “We are currently experiencing the most prolonged period of positive long-term sentiment since mid-2017, which led to Bitcoin hitting $20,000”, adds Joshua Frank, co-founder of crypto analytics The Tie .
Positive sentiment drives more public interest. “Momentum is driving momentum,” said Charles Hayter, co-founder and CEO of digital currency data platform CryptoCompare, “rising prices attract news coverage, triggers FOMO (fear of missing out) and attracts buyers to this space.”
4. Crypto assets are starting to look viable in this economic climate
When governments intervene with fiat currency through interest rate measures that either stimulate or contract a country’s economy, you will see investors reacting accordingly by diversifying investments to safeguard its value.
Bitcoin looks like a viable alternative because it has a fixed supply as opposed to fiat currencies, whose supply grows over the long term.
A recent example is European Central Bank Head Mario Draghi’s hint on June 18th, where he stated that a monetary stimulus may happen if the economy doesn’t improve. He was then criticized by United States President Donald Trump who said this would spark unfair European competition against the US. Subsequently the Federal Reserve bank suggested it would hold off on raising interest rates.
Investors reacted by dropping of depreciating fiat currencies for hard capped Bitcoin, dubbed “digital gold”. “Cut rates. Print money, Make BTC more scarce. Long Bitcoin. Short the bankers!” tweeted Anthony Pompliano, Morgan Creek founder. What he means is that as interest rates go lower, and more fiat currency is created, Bitcoin becomes even more valuable because its supply is fixed and transparent. In addition, the fact that it is on Blockchain also means that it is a neutral, open-access money that no authority can control.
Regulated trading in Bitcoin will be advantageous to anyone looking to invest in Bitcoin at this time. When Bitcoin first started, people transacted Bitcoins via online exchanges. These operators are incredibly lucrative, but they are also risky. According to a March 20 report by cryptocurrency index fund provider, Bitwise Asset Management, 95% of volume on unregulated exchanges appears to be fake or non economic in nature. Subsequent news reports highlight many scams, hacking attempts, fraud and theft that occurred on unregulated exchanges. Unfortunately, through these unregulated exchanges, billions of dollars worth of Bitcoins have been hijacked from global traders.
Governments all over the world, particularly in Europe have reacted to these unethical behavior by making crypto laws stricter for registered crypto exchanges. “Government regulators will prevent or punish bad actors in the industry, and with proper regulations, there is a strong chance that crypto will gain mass acceptance. This will not be in terms of its usual speculative hype, rather it will come in a form that will truly change and enhance the way that we live in the digital world.” says WOWX CEO, Chow Pak Teng.
Pak says this is why WOWX decided to build an exchange that prioritizes traders. “WOWX is a registered, multi-jurisdictional crypto exchange that is legal in Europe and around the world. We are constantly working with regulators to make sure that we are compliant with government regulations all over the world” he explained.
“If you want to invest in Bitcoin, it makes better sense to transact on a highly regulated, legal and secure exchange” he adds. It’s clear that Bitcoin is mooning, and some experts have said that BTC may even hit $20,000 in 2 weeks or $100,000 in one year. Early adopters have already made millions, and if new investors are getting serious about BTC, they ought to make sure that all their transactions are legal and secure.