A cryptocurrency observer sees the rapid volatility of cryptocurrencies, including Bitcoin, which is the largest cryptocurrency by total market value.
The price of Bitcoin witnessed a significant increase in recent times, and the currency rose rapidly to reach the threshold of $ 16,000, and then retreat to the current level at the time of writing this article, estimated at $ 15539.
For those who ask about the most important basic reasons that led to the sudden rise of Bitcoin, we will address them as follows:
High institutional investment:
Institutional investment is one of the biggest reasons the Bitcoin price continues to rise.
Bitcoin added nearly $ 5,000 to its price last month, and the currency rose again by $ 2,000 in the past two days.
In August and September this year, MicroStrategy invested a total of $ 425 million in Bitcoin.
One month later, Square followed suit, and she also invested $ 50 million in Bitcoin.
In October, PayPal announced features that allow users to trade Bitcoin, in addition to Ethereum, Litecoin and Bitcoin Cash.
All of these prominent moves have greatly and massively affected the growth and rise of the Bitcoin price.
Said Mr. "Anthony Tranchev" a executives Nexo company said:
The recent wave of institutional activity - particularly the participation of a large brand such as Paypal - has affected the price of Bitcoin as interest and confidence prevailing in this form of investment often increases after this news.
Jason Dean, a Bitcoin analyst at Quantum Economics, also commented:
This wave of mainstream interest has been boosted by what is known as the "MicroStrategy" influence, as this company has presented several notable moments in recent months.
When MicroStrategy announced its first bitcoin investment on August 11, 2020, CEO Michael Saylor chose several Bitcoin features that make it very attractive for long-term investment.
This included addressing the Bitcoin brand, network dominance, and technical facilities.
It even went so far as to describe Bitcoin as digital gold.
It can be said that “MicroStrategy” opened the appetite of other institutions that were silently watching.
It wasn't long before Square also announced an investment of $ 50 million - or 1% of its total assets -.
Amrita Ahuja, Square's chief financial officer, said that Bitcoin is part of the company's strategy to build products based on a more inclusive future.
Bitcoin has clearly benefited greatly from this good publicity.
Square put its money in when it invested $ 50 million in Bitcoin, but now Square customers and users are taking the lead.
According to a tweet published by "Charles Edwards", founder of "Capriole" investment company, which stated:
Square sells twice as much mined bitcoin.
Square isn't the only company producing great bitcoin numbers.
Grayscale, the investment company that holds the bitcoin on behalf of the investors, raised more than 40,000 bitcoins in the last month alone.
Which means more than $ 600 million in bitcoin.
But these finance giants are not the only reason for the bitcoin price boom, as there is another reason:
The effect of a stable currency:
According to Tether's transparency data, the market value of USDT has exceeded $ 17 billion for the first time in history.
As the largest stable currency in the cryptocurrency market, the growth of Tether is often seen as linked to the increase in Bitcoin prices.
Mr. Ki Yong Ju, CEO of CryptoQuant, said:
Once again, the bitcoin price increased right after the number of fixed deposits increased.
One reason for the link is that buying Tether is a way for investors, particularly in China, to buy bitcoin.
According to a "Chainalysis" report released in August this year, Tether is the de facto alternative for users of cryptocurrencies in China.
One reason for this is that China is particularly harsh about capital flight, in other words moving money out of the country.
Tether, with its dollar-linked value, has given Chinese investors an alternative way to invest.
With the increasing demand from both institutional players in the United States and Chinese investors, the limited supply of bitcoin is having a bigger impact as well.