In recent weeks Bitcoin’s price has seemed to continue marching higher. But what is driving this growth? It turns out there are a wide variety of factors that continue to make Bitcoin rise in value. For the second day in a row, Bitcoin bulls have attacked the $19,500 level in an attempt to flip the crucial level from resistance to support. Each attempt to overcome the resistance is has been rejected near $19,550 but Bitcoin’s swift recovery from the Dec. 14 drop to $19,050 shows that investors remain interested in buying every significant dip. At the moment, the general consensus among traders is that flipping $19,500 to support will open the door to a new all-time high at or above $20,000.
In this article, we will cover the newest information about Bitcoin. We will talk about why the price is so volatile at the moment. Additionally, we will explain why big investors are adamant at buying every bitcoin out there. For more information, make sure you check the Coinbet24 blog. Our blog is listed among the best cryptocurrency based blogs at Top 20 Bitcoin Gambling & Betting Blogs. The Coinbet24 blog sits together with well-known names like CryptoGames, Bit Starz, Reddit, and more. Keep reading to learn more about Bitcoin and why it’s price has been so volatile.
High-rollers are buying Bitcoin every day!
According to Cointelegraph contributor Micheal van de Poppe:
“If we get the breakout above the resistance and we print a new ATH, it’s more important to see the $19,400-19,500 area become support rather than hitting that ATH.”
Van de Poppe further explained that the current bearish convergence on the daily timeframe is not confirmed and he stressed the if Bitcoin price fails to reclaim $19,500 as strong support the likely outcome is that the price will drop to $18,500 where traders will look for a better entry. Even as Bitcoin struggles to hold onto $19,500, the daily chart shows the price continuing to make daily higher lows. Since recovering from the Dec. 11 drop to $17,586. BTC has also made daily higher highs which is a further signal that the digital asset is in a strong uptrend.
While Bitcoin price attempts to trade in a new range, a handful of altcoins pushed higher with double-digit rallies. Elrond price surged 28% during the day and is currently up 115% in the past two weeks. SushiSwap’s governance token, Sushi, also rallied 9.84% to $2.80 and is up 44% over the past 4 days. Bancor was the most notable gainer of the day as it secured a 34.5% rally to $1.70 on the news of the Coinbase Pro listing that took place today. According to CoinMarketCap, the overall cryptocurrency market cap now stands at $566.6 billion and Bitcoin’s dominance rate is 63.6%.
Bitcoin has seen extremely volatile peaks and troughs in its time. Its last peak was near $14,000 in June of 2019. At this point, Bitcoin experienced a hard resistance and it failed to push through this stage. If Bitcoin were to break through that resistance in June it would have likely triggered a bull market. Unfortunately, for Bitcoin bulls, it failed to do so and cascaded down to a low point of nearly $3,800.
In October, Bitcoin retested this resistance point only to fall back down. On November 4th, Bitcoin pushed straight through $14,000 and continued higher. This is significant because Bitcoin’s next resistance point is its previous all-time high of $20,000. With Bitcoin no longer having a theoretical resistance point until its previous all-time high of $20,000, many investors have become bullish that the cryptocurrency will be able to retest that price point or even push past it. This speculation has lead to an increase in Bitcoin’s value.
Inflation and How to Deal with it
Another reason for Bitcoin’s rise is the growing inflation of the U.S. dollar. While inflation is on average 2% each year, recent stimulus spending is poised to greatly increase the level of inflation and decrease the dollar’s purchasing power. With the recent stimulus packages, the United States has added around $2.4 trillion to the economy. This has many worrying about the inevitable decrease in the dollar’s purchasing power and the rise in inflation.
To hedge against this rising inflation, many have retreated from the dollar and have taken shelter in assets that historically have held value or have even appreciated in value. Typically, assets that people convert their dollars into to avoid inflation or volatile markets are ones that are scarce or are less volatile in general. These ‘safe-haven’ assets include things like precious metals, stocks in sectors that are generally less volatile, and more recently, Bitcoin.
Halving and the Stock-To-Flow Model
Perhaps the most important reasons for the rise in Bitcoin’s price are two attributes that are inherent in its design. The first: there is only 21 million Bitcoin that will ever exist. There will be no more and no less and this number will always stay static. This makes bitcoin more scarce than anything that has come before it. Other scarce assets are not 100% finite and in some cases, they can be synthetically manufactured.
The second is a process coded into Bitcoin called the halving. Essentially, Bitcoin has its own built-in escrow mechanism where Bitcoin is released and given to miners as a reward for processing transactions. This reward is cut in half every four years. By doing so, Bitcoin’s rate of inflation is reduced by half each halving and its stock-to-flow ratio is doubled each halving. This process continues every four years until all Bitcoin in this escrow mechanism is released and in circulation. From that point on Bitcoin in circulation will be capped at 21 million. As of the time of writing, there are 18,534,818 in circulation.
So far, Bitcoin’s price has followed its stock-to-flow ratio very closely and if it were to continue on this trajectory Bitcoin’s value could be somewhere around $100,000 in late 2021.
Bitcoin as Means of Payment
Another reason for Bitcoin’s price appreciation is its growing adoption as a payment method. Recently, PayPal (PYPL) announced that it would soon allow its users and merchants to buy, sell, hold, and accept Bitcoin and other cryptocurrencies as a form of payment. This news pushed Bitcoin’s price higher immediately. PayPal has nearly 350 million users who will now have the ability to easily buy, store, and use Bitcoin. PayPal also has well over 20 million active merchants who can now accept the currency.
Aside from PayPal, this has further implications. PayPal also owns the widely popular payment app, Venmo. Venmo has more than 40 million active accounts, making the accessibility to Bitcoin and other cryptocurrencies even more significant. While PayPal and Venmo are newer to crypto, there are a host of other applications that allow its users to buy, sell, and hold. Popular competitors to PayPal and Venmo, Square (SQ) and CashApp, also accept cryptocurrencies making the audience to Bitcoin even wider.