Who else has noticed Bitcoin’s price movement of late? Dude’s been acting like it’s on steroids!
And trust me, traders(both newbies and pros) have been having a field day; making profits all round. ?
But have you ever wondered what could be the cause of that? How long it is going to last? Or perhaps, how it will affect the trajectory of the crypto-verse as a whole?
Bet you have. Now those are the exact questions I answered in this post!
So without much ado, let’s get to the main gist.
So just to be sure you have fun while reading through, I have listed the subheadings under which I will dissect today’s post.
For easy navigation(scrolling all the way down can be frustrating), I have embedded the links to the various subheadings.
You can just click on any of them to peruse its content.
Moving on to the first subheading right away.
5 Major Causes of The BTC Bull Run
The price surge that the Bitcoin network and the entire crypto-verse at large is experiencing can be attributed to:
- The COVID -19 Pandemic
- Limited Amount of Bitcoin
- Increased Adoption
- Rise in Inflation
- The Bitcoin Halving
Find details below.
1. The COVID – 19 Pandemic
The year 2020 was just starting up and people were just beginning to settle into the year before the COVID-19 pandemic struck.
The world was not ready for any pandemic; just as it wasn’t during the Spanish Flu of the 1900s and the Black Plague of the 1300s.
But then, times have changed!
I mean this in terms of technological advancement which brought digital assets with it.
More persons were already beginning to adopt this financial freedom before the pandemic.
With the loss of jobs, lockdown, and travel bans, more people delved into the crypto space.
At one time, some persons felt holding cash is better than holding coins and there were massive sell-offs.
Thus, the price of BTC was dragged down to about $7,000 at the peak of the pandemic (Feb. – April 2020).
Consequently, many others bought off at the point and were hodling. They took charge of the market causing the price of BTC to rise once again.
Towards the end of the year 2020 (Nov. – Dec.), we saw a massive leap in the price of BTC – more than 100% rise!
Thus, the fear of the pandemic keeps making people act and their actions affect the price of BTC and other currencies.
2. Limited Amount of Bitcoin
There is a cap on the number of Bitcoin that there will ever be – it can never be more than 21 million.
So far, we have more than 18 million BTC already in circulation; leaving us with about 2M+ yet to be mined.
Now there is a lot of FOMO on the part of the late adopters of Bitcoin.
Everyone is struggling to get a hold of even the tiniest bit of BTC in the market.
This way, the demand for BTC in the market is increased and as such, the price keeps shooting up.
3. Increased Adoption
When I talk about adoption, I will be looking at Individual and organizational adoption.
For individuals, we say a great influx of persons into the crypto space lately.
This is partly due to the fact that many people lost their jobs during the pandemic and need somewhere/something to invest in.
Again, the influx can be tied to the level of maturity the crypto space have attained.
I mean, more people now understand that it is not a Ponzi scheme but a great investment opportunity.
More so, with the world going digital, it is not surprising that the finance sector is blending in with the trend.
Most transactions now happen online and as such, crypto payments are far cheaper and faster to use.
I will not also fail to mention the increased awareness from the media which has greatly helped to boost crypto adoption in various parts of the world.
In the past year(2020), we saw a lot of companies and institutions venturing into the crypto space.
The list ranges from MicroStrategy to Jack Dorsey’s Square Inc. and also Paypal announcing that its users can purchase Bitcoin with their Paypal account.
Not to mention the CEO of Tesla and the richest man in the world(as of Feb. 2021), Elon Musk, who has been investing in Bitcoin big time!
A combination of these adoptions has also, to a great extent, affected the price of Bitcoin and other cryptos.
Moving on, let’s look at the third reason.
4. Rise in Inflation
The wake of the COVID -19 saw governments of various countries printing more money to help their citizens.
Consequently, we have an increased number of funds in circulation and then, inflation.
This is something that will have a long time effect on the purchasing power on the country’s currency.
And so, investors’ fear grew; leading them to the search for an asset that can serve as a store of value.
Precious metals readily come to mind at this point but… yes, they are great stores of value as they are scarce.
But one can not really ascertain the exact number of these stones that are in existence.
This saw them looking the way of Bitcoin. BTC is an asset with a stated number in existence (21 million).
This alone automatically makes Bitcoin a better option for the investors and so, they went all in.
And because of massive buying, we saw the price of this great asset move up and down.
Thus, inflation plays a role in the price movement of Bitcoin.
5. The Bitcoin Halving
The way the Bitcoin network is designed is that the introduction of new coins is by mining.
When miners perform this very important task, they are rewarded for their efforts by giving them a certain number of BTC.
This reward is set to halve after every 210,000 blocks or roughly every 4 years.
For the genesis block, the block reward was 50BTC.
In 2012, it halved to 25BTC, halved to 12.5 in 2016, and then 6.25 in 2020.
The purpose of this is to release the whole 21 million BTC into the market less frequently over time.
This supply pattern increases the scarcity of Bitcoin and thus, affects the price.
So here you have the reasons for the Bitcoin price surge.
Now you might be asking: Will the price surge ever end? What will happen when it ends?
I answered that in the next subheading.
How Long Will The BTC Bull Run Last?
The other question on the lips of most investors (asides from what is causing the bull run) is: When will the bull run end? Will the price keep rising?
Firstly, in as much as no one knows for sure when this price surge will end, it is actually a good thing for the crypto-verse at large.
I say this not because the price of BTC is rising but WHY it is rising.
At the core of this rise is increased adoption and this time around, we don’t just have individuals but institutions too.
Notable institutions are pumping in huge funds into BTC and the individuals themselves are becoming more tech-savvy.
They are not just buying to hodl but mainly to fulfill a specific purpose.
Now when the bull run will end is dependent on what course the price takes.
So if BTC continues to serve as an effective hedge against macro-economic trends, I believe that more investors will be drawn to invest in the crypto-world.
This will lead to an even greater adoption by other bodies and individuals.
If this happens, it might cause the price of Bitcoin to keep rising.
But if this does not happen, we might see an end to the Bull season.
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Here is the last part of today’s post. Trust you had fun reading through?
So far, I’ve been the one leading the discussion. I will want to hear from you before you leave.
So tell me:
Have you been trading BTC in this bull season? How has it been?
How do you think this BTC bull run is shaping the crypto-verse?
Or perhaps, you have a thing or two to say about the crypto space in general.
Let me know ASAP in the comment box below.
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