A few years ago, no one knew what exactly a bitcoin is and what it does, but today, you hear the name “bitcoin” at every corner of the street.
Amid the pandemic, with vaccine discussions still on the go, new investors rallied to exchange counters to trade in the extra gain phase from cryptocurrencies in the first week of January 2021. The billionaire chairman and CEO of Berkshire Hathaway, Warren Buffett had quoted Bitcoin as “Rat Poison Squared” in May 2018. But despite concerns over dubiety and perplexity raised against Bitcoin, stakeholders still see cryptocurrency as the game-changer.
From experts to frequent investors, everyone is putting Bitcoin orders in huge amounts. The total market value of all cryptocurrencies combined touched $1 Trillion on January 6th, 2021, which is the highest-ever in the Bitcoin industry, beating the last best of +$760 billion. In the latest wave of Bitcoin rush, Stanley Druckenmiller, a hedge fund billionaire, also joined other high-profile investors like Bill Miller, Paul Tudor Jones, Michael Saylor, and a few others, by investing his portion of wealth in Bitcoin.You will find more infographics at Statista
From Unknown to Well-Known
While the world is still reeling under the deadly coronavirus, Bitcoin made a silent entry into the Indian market with a soaring price rise, leaving investors and first-time buyers excited yet perplexed too. Some even compared cryptocurrencies with gold, hyping the market changes and making future predictions.
Indians, on the other hand, have expressed their exaggerated excitement towards cryptocurrencies and started spending millions on trading them. Once carrying the narrative of a scam or fraud, Bitcoin now rules everywhere and is traded in almost every exchange worldwide. But how did Bitcoin evolve so swiftly in so less time? To answer this, a good example is what made Bitcoin official in India.You will find more infographics at Statista
Not only was the Reserve Bank of India’s 2018 decision to ban cryptocurrency in India was lifted by the Indian Supreme Court, but even the banking system is now trying to enter the cryptocurrency market. Amid the coronavirus pandemic, Bitcoin showcased an upward trend starting from March 2020, as per charts US$4,748 and then reached a momentum close to the US $30,000 as of 31 Dec 2020.
Post-December 2020, Bitcoin has never stopped accelerating and reached $40,000 in quick time and is expecting to get bigger and better ahead. Looking at the headlines made by Bitcoin over the last few months, visitors witnessed a rise in other cryptocurrency prices as well. It is no unexpected, but still surprising, to see how investors’ behavioral patterns took a new trajectory altogether after the recent reemergence of Bitcoin.
Donald Trump vs Joe Biden
Amid internal tensions at an all time high in the US as former president Donald Trump and his successor Joe Biden fought a hotly contested and turmoil ridden 2020 Presidential elections, the digital asset never stopped ascending. Earlier, people in America had optimistically prophesied that Biden’s victory would impact Bitcoin in a drastic, but positive way. Unfortunately, Trump’s administration hardly raised any opinion about Bitcoin in the four year term. Back then, Trump’s attention was keener towards Libra than on cryptocurrencies and, in fact, no one knows his school of thought on the digital coin.
Then after the Presidential elections 2020, with Biden flying victoriously leading Trump by a huge margin, the next thing people woke up to was the Capitol in chaos. However, despite the current drastic fall in Bitcoin rates, with less weight on the sell side, institutions are perplexed about Joe Biden’s strategies ahead on cryptocurrencies. Plus, all eyes are on Janet Yellen, previously a Fed Chairman and now sworn in as the new Treasury Secretary. She said, “I think many (crypto-currencies) are used, at least in a transaction sense, mainly for illicit financing. I think we really need to examine ways in which we can curtail their use and make sure that money laundering doesn’t occur through those channels.” However, investors and institutions have a positive view of Janet Yellen regarding Bitcoin regulations and decisions.
Watch: New US Secretary of Treasury Janet Yellen hints at a positive shift in the cryptocurrency environment
Bridging the Inflation Gap
Knowing what 2020 has given us, everyone prayed for the year to end as quickly as possible, considering the worse patterns in businesses and outcomes. This goes with Bitcoin too. On one side we witnessed a spike in Bitcoin price with supporters from investors & institutions, and on the other side, we have conflicting reviews.
Goldman Sachs has claimed that some investors worry about Bitcoin replacing gold, and making the digital asset the next preference to hedge against inflation: “We do not see bitcoin’s rising popularity as an existential threat to gold’s status as the currency of last resort … We do not see evidence that bitcoin’s rally is cannibalizing gold’s bull market and believe the two can coexist”.
After touching the $20,000 mark in December, there was no looking back for the digital asset, as the price kept accelerating and reached the $40,000 mark for the first time. JP Morgan analysts believe that Bitcoin could touch the $146,000 mark and become a better alternative for gold. It sounds unreal to say that – with everything digital, gone are those traditional days where people need governance to move their money from one place to another. Next comes bitcoin in a flash, with a decentralized governing system, operated through technology, supported by miners, and having several distributors worldwide.
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Considering the current unstable conditions, Bitcoin is not a replacement for metals and macro assets but acts as a hedge to secure from unassertive conditions that prevail in the economy. Buying bitcoin is more like buying insurance, assuming the occurrence of an uncertain event down the line. Moreover, once the gap closes, both unemployment and economic-wise, people become aggressive investors. Already bitcoin has generated double returns in 2020 with a surge of over 200 percent amid the fiscal and monetary imbalances. Analysts predict that short-term gains in bitcoin are more or less an alternative investment. But speculating high-returns in the short run could be risky and investors should stop predicting it (for short-term gains). Unlike, it’s advisable to invest in Bitcoin just like monthly SIPs, and look for long-term, keeping the short-term volatility into consideration.
Digital Payment Platforms Opening Gates
Hoping that the COVID-19 vaccine saves the world and brings swift changes in the economic conditions, digital payment platforms like PayPal and Venmo have opened gates for Bitcoin users. PayPal, the online payment system, has taken this decision, which will allow cryptocurrency users of the United States to buy or sell coins via its digital platform. The idea is to make virtual currencies into fiat money by buying and selling with the available merchants on PayPal. Not just that, the digital brand plans to extend its support to the government and central banks to bring a valedictory change in the cryptocurrency market. The best part is, there will be no hassle for merchants to convert the coins into dollars post-transaction.You will find more infographics at Statista
There are no transaction fees when buying or selling Crypto with PayPal until 2021, and there are no fees for holding Crypto in your account. If you use a linked bank account or debit card as a funding source to buy Crypto Assets, your bank may charge you its own fees, including overdraft fees or insufficient fund fees, if applicable. PayPal is not responsible for any fees that may be charged to you by your bank”, as per the PayPal blog.