Bitcoin has been repeatedly considered a failed project. But in recent weeks, this oldest and largest cryptocurrency in the world has strengthened again. Is it a new soap bubble or is it a real value?
From mid-February to mid-March, its price fell by more than 50 per cent - to just $ 4,895. After a brief recovery phase, the price has long hovered near the $ 10,000 mark - until a few weeks ago.
Meanwhile, the most important cryptocurrency has not only managed to make up for the drastic loss since the spring, but its price has risen by more than 53 per cent since the beginning of September. In October alone, bitcoin gained about 30 per cent in value, just in time for its twelfth birthday.
That currency climbed to nearly $ 16,000 last Friday, and on Wednesday (Nov. 11) the Bitstamp cryptocurrency exchange was occasionally worth about $ 15,650.
Thus, bitcoin reached its highest price since January 2018. To recall, in December 2017, bitcoin reached a record $ 20,000. After that the exchange rate dropped drastically and that was the end of the flight. Now the situation around the value of bitcoin looks different again. And there are several possible reasons for that.
The role of elections in the United States?
Analyst Timo Emden said a week ago that due to the until the recently uncertain election results in the US, and in search of alternative investment opportunities - some investors have resorted to cryptocurrencies. He believes that investors wanted to protect themselves from stock market turbulence in this way.
But Sören Hettler, an expert at DZ-Bank, wrote in a recent analysis that the driver of bitcoin development actually hopes for a sharp rise in demand, not so much an election in the US. Several bitcoin investment funds, such as Graysco, have noticed significant inflows in recent months, and in some cases recorded record values in some cases. And Fidelity, one of the global players, founded a bitcoin fund this summer.
PayPal has given a big boost to bitcoin
In addition, cryptocurrencies have benefited from the recently announced plans of payment services giant PayPal to accept digital currencies as a means of payment. Investors assume that this step towards commercial use will give new impetus to bitcoin. Easy disposal through the already well-accepted PayPal system can lead people to accept cryptocurrency more widely.
PayPal users in the U.S. will in future be able to buy, sell and store bitcoin through the platform, the U.S. company announced in October. And from the beginning of 2021, payments in cryptocurrencies and retail will be possible via PayPal.
Interest policy, corona, youth and regulation announcement
Hettler also sees central bank zero-interest-rate policies and giant spending programs during the corona pandemic enacted by governments as important drivers of this cryptocurrency boost. According to an analyst at DZ-Bank, this has led to a wave of liquidity on which cryptocurrencies are also floating. This could include the fact that this year there are more and more young people who have entered the market and often trade bitcoin.
Regulation is considered the key to long-term demand for cryptocurrencies. And there has been progressing recently. At the end of September, the European Commission proposed common uniform rules that could enter into force at the end of 2022 and thus create security for investors.
In addition, cryptocurrencies are currently a topic of increasing discussion at the central bank level. For example, the European Central Bank (ECB) is sceptical about bitcoin, but is considering introducing a "digital euro".
DZ-Bank expert Hettler finally says: “The arguments for the growth of the value of bitcoin are very understandable. But all this does not guarantee that this dynamic will continue. Bitcoin has yet to develop a tradition and permanently win people's trust in its specificity and value. "
