Where Is Bitcoin Headed After Its Latest Jump Past $55K?

Highlights

• Bitcoin has enjoyed almost a 90% return in 2021. And, the journey it has taken to get to that point tells a completely enjoyable story
• Bitcoin investors should be asking themselves how big the next correction will be because, as it’s not a question of “if” but “when” and “how much”
• Throughout 2021, the US$10K jump has immediately been followed by a drop approximately equal to its rise

The Bitcoin bulls have been validated in the past week as Bitcoin surged past US$50,000 and today reached US$55,000.

The latest rise from Bitcoin is the largest and steepest since its ascent to its record high of US$64,000 in April this year and it has Bitcoin bulls predicting big things for the world’s largest cryptocurrency.

A Quick Look at Bitcoin’s 2021

If you have ever wondered what people mean when they describe digital currencies as “volatile”, one need only to look at Bitcoin’s price graph for 2021.

If we take the year to date growth, Bitcoin has enjoyed almost a 90% return in 2021. But the journey it’s taken to get to that point tells a less enjoyable story.

The first 10 days of the year saw a US$10,000 rise – a pattern which repeated itself a few times throughout the first half of the year.

Where Is Bitcoin Headed After the Latest Jump Past $55K?

Bitcoin’s latest surge is approximately the same pattern. On September 30, BTC was valued at US$43,450. In the past 10 days, it has jumped to US$55,000.

This is a major crossroad for Bitcoin investors. Throughout 2021, the US$10K jump has immediately been followed by a drop approximately equal to its rise. The biggest drop came on May 10 after BTC had reached US$59,222. On this occasion it plummeted to US$32,449 – a drop of around 45%.

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How big will the next correction be?

This is the question Bitcoin investors should be asking themselves because, as we’ve seen, it’s not a question of if. Rather it’s when and how much.

The latest surge, which began seven days ago, is part of a larger bull run that began on July 20. At this time BTC was valued at US$29,731, which means this bull run is valued at around US$25,000, so far. This furthermore means it’s the second-largest bull run in Bitcoin’s history – the biggest being from January 1 from just below US$30,000 to April 14, Bitcoin’s record high of US$64,000.

Bitcoin’s Outlook

Although it is almost impossible to pinpoint the reasons for Bitcoin’s massive drop earlier this year, there are a couple of events which, coincidentally or not, immediately preceded it.

One of those events was the Chinese government’s attempt in April to tighten the reigns on digital currency in China. Since then, China’s resolve to stamp out cryptocurrency has only become stronger and more definitive.

Last month, China’s government and other regulatory bodies joined forces to completely outlaw both the trading and mining of cryptocurrencies. This time around, however, it hasn’t seemed to damage Bitcoin’s value, if it ever did in the first place. Rather, it has come in the middle of a majorly lucrative run for Bitcoin.

The other major event that preceded Bitcoin’s severe mid-year dive was concerns over Bitcoin mining and its increasingly harmful impact on the environment. This was brought to the forefront by Tesla founder Elon Musk when he announced that Tesla had cut ties with Bitcoin and no longer accepted the digital currency as payment for their cars.

Not much has changed since, in regards to Bitcoin mining, except for the fact that the public now knows things like – the electricity Bitcoin miners use on an annual basis is equal to that of Egypt and is also 0.5% of the world’s annual electricity usage.

While these two things were the major contributors to Bitcoin’s mid-year meltdown is debatable, it can be argued that a mass sell offs begat further sell offs creating a domino effect which eventually saw Bitcoin lose half its value. This happens all the time in the crypto market, albeit usually on a much smaller and less devastating scale. That being said, it would be foolish to think this wasn’t possible again in the very near future.

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What’s Different This Time Around?

What the aftermath of Bitcoin’s mid-year crisis did do was it fuelled discussion. After a crushing blow like that, an asset can either crumble or rebuild. Bitcoin has done the latter.

Last Friday, US Federal Reserve Chairman Jerome Powell made a startlingly bold declaration, telling congress that the central bank had “no intention” of following in China’s footsteps by banning cryptocurrencies.

These words were reinforced on Tuesday when US Securities and Exchange Commission Chairman Gary Gensler reiterated this in a financial hearing, saying he has no plans to outlaw digital currencies.

It’s things like this that cement Bitcoin as a legitimate form of asset. Moreover, it highlights the importance of legitimacy when it comes to cryptocurrency – of which Bitcoin is the poster coin. The truth is the world is still unsure as to how Bitcoin - and crypto in general – will fit into our existing economy. But every time a major figure publicly supports Bitcoin or every time a country decides to adopt Bitcoin as legal tender, these things go towards making Bitcoin bigger.

The difference between today and April this year, when Bitcoin lost half its value, is now Bitcoin is stronger and closer to legitimacy and being considered part of the mainstream financial system.

Although it’s never easy to predict what’s around the corner in the crypto space, these appear to be good days for Bitcoin.