Why Is Bitcoin Going Up so Fast?

by Sachin

Bitcoin has experienced rocket growth at the end of 2020 and follows the upward trend at the beginning of 2021. The price fluctuates between $30 000 – 40 000 range and many investors are worried about the perspectives of the crypto world leader. So, what’s brought Bitcoin to the current numbers, and what we can expect from its future price.

Let’s go back to history

The first Bitcoin price peak took place in 2017 when its price of $20 000 was unbelievable for many. In that period the crypto ecosystem has been dominated by individual retail investors and the growth in price was mostly speculative in nature. The market was bullish and most of its members experienced the “fear of missing out”. Taking all these factors under consideration, the quick explosion of the Bitcoin price bubble was not a surprise. Such situations are typical for the financial markets and happen from time to time. But, in 2020 we’ve met with a completely different picture. Let’s explore the new Bitcoin rocket growth path.

What Was Behind Bitcoin Moving Mainstream?

In 2020 the market changed significantly. It was full of turbulence and uncertainty. The global pandemic, US-China tensions, and Brexit were just a few factors contributing to market volatility. As you probably remember the first growth of BTC price up to $30 000 took place in the middle of March when the COVID-19 lockdown hit the world. 

Later the other factors contributed to the future price increases:

  • A big influx of institutional investors

some investors considered BTC protection against inflation risks. That’s why pension funds, investment trusts, insurance, and university funds made decided to withdraw their money from other sources and buy crypto. Even such outstanding financial giants as Morgan Stanley made favorable predictions concerning Bitcoin development and made their investment. The introduction of the bitcoin futures and options was the other factor influencing the investors’ demand

  • A weakness of the USA dollar

the currency demonstrated a significant downward trend in the last year. One of the main factors behind the dollar’s weakness in 2020 was that The Federal Reserve printed more than $3 trillion dollars to support households and businesses in the pandemic period. Following democrats victory at the Presidential elections the printing machine is not expecting to stop putting additional pressure on the dollar

  • Retail purchases growth

in 2017 BTC was used mostly for speculations. It does not mean that the situation significantly changed in 2020, but the number of retail purchases with cryptocurrencies demonstrated sufficient growth. One of the reasons for that was Visa’s interest in BTC and the launch the credit and debit cards allowing Bitcoin transactions. Among other reasons was the enablement of PayPal operations using BTC. This tendency is likely to strengthen in future years, potentially making Bitcoin a more favorable form of payment

  • Speculation

the last, but not the least factor. More and more people are interested in the crypto market and one of the main reasons for this is big profits. When BTC price fluctuates in the corridor $30 – 34 000 there is a big room for investors who convert‌ ‌usdc‌ ‌to‌ ‌btc when the price goes down and make the backward operation once the BTC price increases. It means that BTC remains significantly volatile and is not likely to stabilize in the nearest future, meaning that the new interested buyers will enter the market raising the demand for it

Where will the BTC price go next?

In fact, nobody knows how BTC price will change in the next years. One thing that we know for sure is that price swings will be severe and it means great profits are ahead. That’s a natural development for any financial market and the crypto market is not an exception. At the same time, a large part of institutional investors will hold the price above $20 000, but how far it can increase nobody can predict for sure. 

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