Will Bitcoin price continue to rise in 2021?
17 days have passed since the price of Bitcoin reached a new record on January 8, 2021, when the price of Bitcoin reached 41,940 dollars, according to "coingecko".
Since then, Bitcoin has not been able to rise again and overcome the resistance of 40 thousand dollars, the last time it tried to do it, it quickly fell to the level of 34 thousand dollars and remained fluctuating between 32 thousand dollars and 35 thousand dollars since then.
The question currently present among the crypto community is:
Will Bitcoin do it and rise again and break its record set at the beginning of the year, or will it decline to lower levels?
In the following, we will address two positions that are led by bears, who believe that Bitcoin has satisfied its rise and it is time for long corrections and among the bulls who believe that the bitcoin party has just begun and that Bitcoin will make its way to high numbers.
Bitcoin will fall further:
The bears see bitcoin falling further and they provide four reasons as evidence for this:
1- Fears of being overbought drive currency holders and traders to reap profits:
Sellers can be forgiven for profit or risk in this market.
Bitcoin's price has gone into uncharted territory by double what it has been in less than a month, compared to its previous high on record in December 2017.
The recorded summit started 3 months ago.
As the price of Bitcoin was estimated at $ 10,000 last September, then quadrupled and reached the level of $ 41,000 at the beginning of January 2021.
This means that Bitcoin has moved quickly towards reaching record levels, and that was among the few investment assets that did so.
However, the bears believe that Bitcoin, when it reaches a new peak, is buying up and it is time to sell and reap profits.
2- Widespread panic and fear of double spending:
Last week there were rumors that Bitcoin was undergoing a double spending attack and the rumors started on Wednesday when BitMEX spotted a double transaction.
Fee exchange transactions are a natural part of the blockchain, in fact, it is an intentional feature of bitcoin engineering.
Where key holders are allowed to resend a transaction that has not yet been confirmed, but at a higher fee to pass this time.
This way, senders can entice miners to validate and confirm the request and add it to the blockchain if the original fee is too low to pass.
For example: Muhammad would like to send 1.3 Bitcoins to Ali and set a fee of $ 2, Muhammad waited a long time, but his transaction did not pass here. Muhammad decides to increase the fees to make sure they pass this time, so he withdraws the first transaction and adds fees, for example, up to $ 8 to ensure that it is entered into the Bitcoin blockchain, the viewer For the transactions, he finds that Muhammad performed two transactions with the same amount, but what he passes through is one transaction, but rumors have exaggerated this matter and saw it as a double transaction.
Bitcoin's total market capitalization fell by nearly $ 81 billion after worries and doubts about double-spending.
But Bitcoin is designed to combat double spending.
3- Organizational Threats:
As the United States moves forward with its transition to the Biden administration, regulatory uncertainty looms for cryptocurrencies.
The Trump administration was overtly hostile to bitcoin and cryptocurrencies after being largely quiet about the fintech industry until 2019.
Then, in July of that year, the president broke his silence on cryptocurrencies to say he was not a fan of Bitcoin.
Trump mentioned Bitcoin and Libra by name, and also linked them to illegal activity such as illegal drugs.
President Joe Biden nominated Janet Yellen to head the US Treasury in November.
The former Federal Reserve Chair was a critic of open source finance.
Industry concerns over stifling regulations heightened when Yellen repeated the Trump administration's stance on cryptocurrencies during the Senate confirmation hearing this week. But within hours, in a written appendix of her answers, she adjusted her stance.
Meanwhile, Biden has ordered a regulatory freeze on all new proposals until his administration has a chance to review them.
This includes a proposal from Yellen's predecessor at the Treasury Department to regulate cryptocurrency wallets.
Bitcoin users are waiting to see what Biden will do.
4- Bitcoin is not linked to any other investment asset:
Perhaps the biggest problem facing Bitcoin's price right now is the still open question of correlation.
Is Bitcoin a related asset, rising and falling with other securities such as stocks, bonds, and commodities?
Or an unencumbered asset and hence hedging value to diversify investment portfolios?
This is the role that gold plays in money managers' portfolios to hedge against inflation and stock market capitulation.
Bitcoin market movements were not class-related
Others for most of 2019.
Neither directly nor indirectly.
But during the worldwide asset valuation collapse in March, Bitcoin also fell as sharply as anything else.
This dealt a major blow to the non-correlation thesis, a suspicion that persists to this day.
Bitcoin will rise further:
After we discussed the opinion of bears and the possible reasons that contribute to the decline of Bitcoin, we will discuss what the bulls see and how it is possible for Bitcoin to rise and rise more:
1- Tsunami of Institutional Investment:
Despite bitcoin headwinds, hedge funds and institutional investors are pouring big money into the crypto market.
In a never-ending hunt for returns, managers had to look outside the stock and bond markets as the year passed.
Many big names have entered the crypto arena and investing in Bitcoin, such as "Micro Strategy", "Square" "Gray Skile" ...
For many Bitcoin enthusiasts, the wave of institutional investment in Bitcoin is just beginning.
2- Retail investors are driving celebrities towards the crypto market:
At the same time, the audience of retail investors (individuals) is more oriented than ever to the bitcoin and cryptocurrency industry.
The volume of "Google" search for "Bitcoin" is currently about 10x on its level in September 2020.
A wave of star-studded celebrity endorsements is raising awareness of Bitcoin and cryptocurrencies to a global audience.
Large-scale social media channels are amplifying Bitcoin's signals, speeding up its adoption in a way that was impossible a few years ago.
3- Breaking the inflation around paper currencies:
Perhaps one of the main things that bitcoin enthusiasts like about the limited supply compared to traditional fiat currencies.
As assets denominated in central bank currencies are inflationary by design, Bitcoin is deflationary.
Little wonder that the unprecedented monetary expansion that crushed deflation last year sent Bitcoin's price twice as high as it was in 2017.
4- The Strong Basics of Bitcoin:
At the height of the Bitcoin bubble in 2017, Peter Bouckfar, chief investment officer of the Bleakley Advisory Group, described Bitcoin as a massive price hunt based on nothing.
Bitcoin is groundless and is a popular staple among cryptocurrency pundits.
But Bitcoin does not depend on anything, rather it depends on the great difficulties and expenditures of about 10,000 complete nodes around the world, and is taken to secure, maintain and update the Bitcoin network in general.
Bitcoin is a program that offers fast, accurate service, low-fee accounting, and is available to anyone with a computer and internet access.
This is a business model, and the basic fundamentals reveal a lot about Bitcoin's performance in January 2021.
Even with Bitcoin's price dropping around 16% from January 8th to January 12th, its fundamentals remained stronger than ever.
Bitcoin mining difficulty hit a record high.
The bitcoin mining rush continued and competition increased even during this week's panic.
