- Bitcoin’s price exceeded $18,000 to hit its highest for the first time since December 2017
- Bitcoin’s price rise was mainly driven by the demand for its recognised quality as an inflation hedge
- The digital currency had plunged 25 per cent in March in the wake of the coronavirus outbreak
The price of world’s best-known cryptocurrency Bitcoin has hit $18,000 on Wednesday -- which is the highest since December 2017 and has soared about 160% this year. Throughout the pandemic and uncertain times, the investors have been putting their money in bitcoins. The bitcoin price has been going up since October, $11,000 to $15,800.
The spike in the digital currency is mainly driven by the demand for its recognised quality as an inflation fence and prospects of mainstream acceptance. The largest as well as the most popular cryptocurrency Bitcoin soared to $18,483 and was last up 2 per cent.
Monark Modi, the founder and chief executive officer at Bitex, told the media that the sudden jump in bitcoin has happened due to the increasing investment from institutional investors, payments firms and investment banks. This can be attributed to the shift of the investors' preference towards alternative asset classes, specifically digital assets.
In 2019, Bitcoin rose 87%, and it had been having a very strong 2020 until mid-February. But in March, the bitcoin had crashed 25 per cent in the wake of the coronavirus pandemic. However, this year the cryptocurrency bitcoin has risen around 160 per cent overall and climbed 17 per cent in the past three days.
What analysts say
As bitcoin surged, many industry experts and market analysts appear to be divided on the short-term prospects of the cryptocurrency. Some analysts feel that the sudden surge in the prices of bitcoin is the result of the outcome of the US presidential elections.
While some experts feel that the cryptocurrency is set for a pullback as whale deposits start increasing. Other analysts and experts believe that there is slight resistance until $20,000 and the cryptocurrency is going to be at its highest peak before the next deep correction.
A top-notch executive at CoinDCX said that the price of bitcoin would rise further mainly because of robust fundamentals. There is a growing interest in bitcoins from both retail and institutional investors across the world.
In the last one month, bitcoin has witnessed an impressive momentum which can be attributed to the two factors. First, during the earlier bull cycles, as seasoned trader Peter Brandt described, the cryptocurrency witnessed about nine corrections. However, in the current ongoing rally, bitcoin has seen just only two 10 per cent corrections.
The second factor is that bitcoin has constantly been salvaged from levels where corrections were required, like when the cryptocurrency bitcoin had hit $14,774 on Binance 16 November.
Bitcoin’s journey ahead
Experts say investors tend to move their money out of shares during volatile times and invest in cash and gold. Analysts feel that people in these volatile times are seeing bitcoin as gold’s modern alternative. There has been a spike in the daily volumes in the bitcoin's trading, as suggested by the analytical firm Arcane Research that the bitcoin trading volume has grown by 270 per cent in the past one month, and the rise is a clear message that there is a reasonable demand for cryptocurrency.
But bitcoin is still considered risky and appears not to be much popular among traders as a medium of exchange as it poses a risk to wealth. But things are gradually changing. In October, PayPal, – which has almost 350 million users worldwide, said that its customers could store and spend bitcoin from early 2021.
A report compiled by Bloomberg has suggested that the recent high trend in the bitcoin trading volumes can reach an all-time high before the end of the year. This indicates that the cryptocurrency has substantial room to grow in the coming days.