The world’s first cryptocurrency has risen from the ashes and is now back in the spotlight. Bitcoin has returned to explosive growth and has broken all past records this winter and fully recovered from a deafening drop two years ago. Since the beginning of the year, the digital currency exchange rate has updated its historical maximum five times and exceeded $ 34,000 for the first time. After such a rapid take-off, the world has once again begun to closely monitor the cryptocurrency market and build overly optimistic forecasts about it. A price of $ 100,000 has already been announced for the same bitcoin this year. And yet it is too early to rejoice. Digital perspectives – in the material “Lenta.ru”.
The new year 2021 began with a crazy bitcoin rally – in total, the cryptocurrency has added $ 14,000 since mid-December, and its rate has risen nearly fivefold in the year. While the planet was celebrating and eating salads, news of records of the most popular digital currency tore the editorials of the world’s largest publications. The coin peaked at $ 34.1 thousand, the coin began to be repaired, lost 12 percent, and continued to grow a day later. The sharp rise in bitcoins is linked to unprecedented volumes of emissions from global central banks, as well as a genuine interest in cryptocurrencies by big players. Such unusual volatility is common in the cryptocurrency market. The world has buried bitcoin several times, but each time the cryptocurrency sooner or later regains what it lost and takes new turns.
In the history of bitcoins, several cycles of unbridled growth and sharp decline have followed. In 2009, the New Liberty Standard set the bitcoin rate at about $ 0.00076. However, in the summer, the cost of the cryptocurrency was almost a hundred times higher, and in the middle of the fall, one bitcoin gained 50 cents. By November 2013, the price of the first cryptocurrency had reached $ 1.2 thousand. The coin has thus risen in price by 1,570,800 times in just four years.
In the period 2014-2015, the cryptocurrency market was covered by bears (investors who play at lower prices – approx. “Lenta.ru”), and the bitcoin rate has not exceeded $ 300 all this time. Among the reasons for such a sharp drop is the bankruptcy of the Mt.Gox exchange, which then traded 90 percent of all bitcoins. This caused a real panic in the market and a fall in the price of digital currency. The situation was exacerbated by the fact that at that time geeks were mainly interested in bitcoin (people who are passionate about high technology – approx. “Lenta.ru”).
In the fall of 2015, bitcoin adopted a new overclocking and updated its highs several times over the years, attracting the interest of large investors. The whole of 2017 was held under the auspices of the strongest rally – bitcoin rose from $ 1274 to $ 20,000 in nine months. Cryptocurrencies have become an extremely popular topic, the media has been closely following every movement of bitcoins, and ordinary people have been rushing after them. Given this, new digital currencies grew like mushrooms after the rain. Pavel Durov and Mark Zuckerberg announced at the time that they intended to create their own coins.
But growth has been replaced by decline. For 2018, bitcoin has systematically broken through between $ 17, 15, 12, 10, 8, 6, and $ 4,000. As a result, the annual minimum was $ 3,242. Thus, the drop was more than 80 percent. Other cryptocurrencies (altcoin) also rushed through the leading cryptocurrency, and the total market capitalization lost almost 90 percent – at around $ 130 billion, it was last found in August 2017.
Both times, bitcoin went through a classic cycle when ordinary people, enthusiastic about the rapid growth of cryptocurrencies, fell into a state of euphoria and accelerated the market to a bubble. After that, the bubble burst under the influence of external factors, and bitcoin and after the rest fell significantly below equilibrium values. The collapse in prices has frightened amateurs and speculators, while attracting banks and large funds to the industry, which are interested in investing in cryptocurrencies in the medium term.
In 2019, cryptocurrencies managed to gain only a small portion of the fall, but there was no talk of the former growth. Public interest in the market has been declining more and more. But in 2020, everything changed. Bitcoin has been actively growing for much of the year, bringing with it other cryptocurrencies as well. Bitcoin started growing as early as March, and when the world was hit by a pandemic, that growth only intensified, and by the end of the year, the most well-known cryptocurrency had completely broken all imaginable records. If at the beginning of October the cryptocurrency was worth about 11 thousand dollars, on December 1 the price reached 19.9 thousand dollars, and on January 3 it exceeded 34 thousand dollars for the first time in history.
There are several reasons for this. First, the pandemic spurred bitcoin to grow. Investors have been pouring into cryptocurrencies and generally risky assets, with enthusiasm for vaccine development and further stimulus measures by global central banks. According to the head of the data analysis department of the international crypto broker CEX.IO Broker, Jurij Mazur, the money was poured into both traditional websites and digital asset exchanges.
so many times
bitcoin rose from 2009 to 2013
On the other hand, the role of bitcoin as a safeguard is increasing. As early as May, billionaire and one of the world’s most famous traders Paul Tudor Jones announced that he had transferred almost 2 percent of his portfolio to Bitcoin. He explained his decision by the fact that the authorities spend more than the state deserves, and the incentive policy draws additional money into the economy. This leads to the depreciation of traditional currencies, so there is no point in investing in them.
Second, after the highly questionable attitude of regulators towards cryptocurrencies in recent years, in 2020 the central banks of several countries showed interest in them. Thus, the digital yuan emerged in China. They first started talking about it as early as August 2019, and in April 2020, tests of the country’s digital currency began. According to the ambitious plans of the People’s Bank of China, the digital yuan is expected to replace traditional money and all existing cryptocurrencies in the future.
In October, Russia’s central bank announced the creation of a digital ruble. The final decision will be made following a public comment. At the same time, strictly speaking, the digital ruble will not be a cryptocurrency, as it is equated as a means of payment with cash and non-cash rubles and is issued by the central bank. On 1 November 2020, the head of the European Central Bank, Christine Lagarde, announced a survey to determine Europeans’ attitudes towards the digital euro issue.
A third reason for Bitcoin’s growth is corporations ’interest in cryptocurrencies. The Square payment system, run by Twitter creator Jack Dorsey, a longtime Bitcoin fan, has converted $ 50 million (about a percent of its assets) into bitcoin. The company noted that this is just the beginning of Square’s expansion into the cryptocurrency market. In addition, in November, the British investment fund Ruffer invested in bitcoin with assets worth $ 27 billion. The fund has invested 2.5 percent of its assets in cryptocurrencies.
Another payment system, PayPal, has announced its plans in this direction. The company will develop and launch a digital wallet with extended support for cryptocurrencies that will include Bitcoin, Ethereum, Bitcoin Cash and Litecoin. Wallet users will be able to freely buy and sell cryptocurrencies, as well as pay with it.
Finally, investors, frightened by the U.S. Securities and Exchange Commission’s (SEC) allegations against the Ripple cryptocurrency platform, transferred their funds to bitcoin. She was accused of selling $ 1.3 billion of unregistered securities under the guise of her XRP tokens. As a result, Ripple crashed by 40 percent and bitcoin growth accelerated.
Experts are divided over the future of Bitcoin. Russian experts are generally dubious. The author of the bitcogan channel Telegram, HSE professor Jevgenij Kogan, believes that jumping into the back cart is already dangerous, as it is impossible to predict a direction correction. According to the head of the analytical department of AMarkets Artem Deev, the price of bitcoins can fall three or even four times. Oleg Vyugin, chairman of the supervisory board of the Moscow Stock Exchange, believes that cryptocurrency due to its instability can not be considered a means of defense. This is a rather promising asset, but until the cryptocurrency acquires recognized functionality as a means of settlement or investment, it does not deserve the interest of investors.
Experts in the US are much more optimistic. Bloomberg Intelligence strategist Mike McGlone noted that the circle of investors observing cryptocurrencies is growing. Bitcoin is not only of interest to “technology strikers and speculators,” but is increasingly appearing in large international investment portfolios. According to McGlone, the growth of the digital currency will continue in the new year. Anthony Trenchev, lead partner and co-founder of cryptocurrency company Nexo, also agrees, saying bitcoin could rise to $ 50,000 in the first half of 2021. He is convinced that the return of institutional investors to work after the Christmas break will be another catalyst for growth.
JPMorgan analysts, on the other hand, are not forecasting the current year, but are convinced that in the long run, the price of bitcoins could exceed $ 146,000 amid the crowding out of gold as a defense. Analysts say the convergence of volatility between bitcoin and gold is unlikely to happen quickly and will last for years. Scott Minerd, investment director at Guggenheim Investments, is even more optimistic and believes Bitcoin would eventually rise to $ 400,000.
No one can say for sure how the cryptocurrency will behave going forward, but the current growth in quotations is still different from the situation at the end of 2017. According to Chainalysis, cryptocurrencies were bought mainly by small investors from Asia at the time. In 2020, institutional investors and large companies and funds began extracting bitcoin, mainly from the US and Europe. Such buyers acquire assets for strategic purposes and not for the usual speculation that takes Bitcoin to a new level in terms of investment and will maintain their offerings.