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Why Bitcoin Price Is Rising
You probably know that Bitcoin price has been marching higher over the years. The question lingering in your mind now is, why is the price of this cryptocurrency increasing? Well, several factors can explain the continued growing value of this digital currency.
Today, Bitcoin is among the cryptocurrencies that most people want to trade on platforms like the Digital Yuan trading App. And this is for a reason. Being a premier digital currency gave Bitcoin a competitive advantage over the other cryptocurrencies. This virtual currency has the largest market capitalization. What's more, more people know about this currency. But, why is its price rising? Here are some of the possible explanations.
Previous Resistance
Bitcoin has undoubtedly experienced extremely volatile troughs and peaks over the years it's been available. Perhaps, this cryptocurrency's price hit its peak back in June 2019. At this time, Bitcoin's price was almost $14,000. That's when this cryptocurrency exhibited stiff resistance.
If this cryptocurrency broke through this resistance, it would have triggered the bull market. However, this cryptocurrency didn't do that, and it cascaded down to the lowest point of almost $3,800. Bitcoin resistance point experienced another retesting in October. Again, it fell back down and then pushed straight on 4th November through $14,000 and kept going.
And this was significant since the next resistance point for this cryptocurrency is the previous, all-time high point of $20,000. That means Bitcoin doesn't have a theoretical resistance. Consequently, more investors are bullish that this virtual currency can retest its price point or push beyond it. And it's this speculation that has made Bitcoin's value keep rising.
Safe-Haven Assets Rush and Inflation
Another factor that explains the rise in Bitcoin price is the increasing inflation of fiat currency. On average, annual inflation stands at 2%. However, recent spending on stimulus is likely to increase the inflation level and decrease the U.S dollar purchasing power.
Recently, the United States added stimulus packages of around $2.4 trillion. And this worries many people about the potentially inevitable decline in the dollar's purchasing power and an increase in the inflation rate.
As such, many people have turned to assets that can potentially hold their value or appreciate as a hedge against the increasing inflation rates. Essentially, people are opting for the investment assets they can convert dollars into to avoid volatile markets or inflation. Bitcoin is one of these assets alongside stocks and precious metals.
Bitcoin Adoption
Bitcoin price has also continued to appreciate due to its increasing adoption as a payment method. Many businesses the world over now accept Bitcoin payment. PayPal has also announced that it will soon allow merchants and users to sell, buy, and accept Bitcoin payments.
This news increased Bitcoin price immediately. That's because PayPal has almost 350 million users who may eventually use the platform to purchase, store, and use Bitcoin on the system. Additionally, over 20 million merchants that use PayPal can now start accepting Bitcoin payments.
The move by PayPal to accept cryptocurrencies has also prompted many companies to contemplate taking Bitcoin payments. And this has catapulted Bitcoin price further.
Institutional Investment
The current economic climate prompts many institutions to hedge against swings in the market and hold minimal cash. And this explains why many companies are converting their fiat money into Bitcoin. Essentially, many publicly traded entities are converting their treasuries into this cryptocurrency as value storage. And this has also increased the value of this cryptocurrency.
Final Thoughts
Bitcoin has proven its ability to withstand harsh economic times. As such, people and institutions see this cryptocurrency as a good value storage. Consequently, Bitcoin demand has continued to rise, pushing the price higher. What's more, this cryptocurrency's adoption increases as more people start using it as a payment method. All these factors contribute to the increasing price of this cryptocurrency.
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