Cryptocurrencies reaching new ground after receiving support from major companies
The entire cryptocurrency market has been experiencing a massive boom recently. Bitcoin has hit $50K, Ethereum is at $1800, Dash surpassed $250. Financial turmoil in 2020 has introduced many people to the benefits of cryptocurrencies, and their popularity has continued to rise this year as well. Just a few days ago, BTC has received arguably its biggest endorsement, when Tesla bought $1.5 billion worth of Bitcoin. The tech-giant allocated nearly 15% of its net cash, thus enforcing its trust in the crypto market.
As expected, there was a huge ripple effect in the market, with prices surging from $39,000 to $48,000 in a day. BTC is currently sitting at $50K with no signs of slowing down. The main reason behind this is that more and more companies are starting to rally behind the idea of BTC gaining widespread acceptance as a means of payment.
Future of Bitcoin
At the moment, central banks remain sceptical of digital currencies. Analysts, on the other hand, remain slightly more optimistic. Bitcoin is 1135% up since last March and is only going higher thanks to similar endorsements. Tesla is the latest company to add bitcoin to its corporate treasury, following in the footsteps of Square and MicroStrategy Inc.
There are numerous rumours that Apple could be next in line. Analysts are pointing to the possibility of the company allowing BTC to be exchanged on its Apple Wallet service, as well as investments in units of the crypto coins. Graham Tanaka, the president and chief investment officer of Tanaka Capital Management stated that Tesla’s move is a clear indicator that cryptocurrencies will emerge as another store of long-term value, similar to gold and the dollar. “Companies are very careful when it comes down to their reserves,” he said. “This doesn`t appear to be a unique, one-in-a-million situation. It appears to be something that may be a fundamental change.”
The main reason for success
First of all, let us address the most glaring question – why is Bitcoin booming and is it sustainable? There are numerous reasons, but most of them come down to a simple concept of legitimacy. Bitcoin has shed its reputation of being associated with cyber criminals and is now at the forefront of alternative currencies that are not tied down to any state or government.
In addition, it is gaining ground with institutional investors thanks to its inbuild scarcity of just 21 million coins, meaning that once all the coins are mined, their value will continue to grow. Much of the value currently comes from the associated risk – Bitcoin is infamous for its volatility. Once businesses adopt it as a viable payment method, there is a possibility that the same payments could be worth a different amount each week.
Is Bitcoin a bubble?
Some sceptics are pointing to the possibility of a bubble in the crypto market. These can happen when people start buying into a certain asset solely based on their expectations that it will go up in order to achieve a profit. While some novice traders could see the resemblance, there is a consensus that Bitcoin has value as a hedge against inflation. As more and more institutional money starts coming in, we are bound to see the prices jump even higher.
Is it too late to get in?
As we witnessed this January, each tweet could have a massive impact on the current value. This volatility is where many traders thrive, and thanks to investments like the one Tesla made, it a very exciting time to be a trader. Buying and selling became much easier thanks to crypto exchanges like cryptme.io. You can create your account and start trading immediately. So, if this fits your levels of risk and ambition, feel free to jump in, as 2021 seems to be a very promising year for cryptocurrencies.