Despite all the ups and downs of 2020, this year has been a great year for Bitcoin. However, many believe that this growing trend will continue.
To Report Cryptopotito, the bitcoin price crossed the $ 20,000 resistance barrier, almost all buyers of this digital currency entered the profit range. On the other hand, anyone who bought their bitcoins at the March price floor (March 98) has made a 500 percent profit. Based on these factors, Bitcoin can be considered one of the most profitable assets in the financial markets. The main question is what factors have accelerated this price jump? What has caused the price of Bitcoin to break the peak of 2017 and reach $ 27,000? Can these factors perpetuate the current trend?
Death of the dollar, a prediction
Looking at the daily chart of the dollar index up to 2020, it can be confirmed that the US dollar is on a downward trend. In fact, the dollar is likely to run out as a reserve currency.
Ruchir Sharma, a senior strategist at Morgan Stanley Investment, is one of the few who has spoken out on the issue. In his speech, he described how the dollar has used its position as the world’s reserve currency for 100 years and how the federal government has abused its monopoly in the financial markets. “How can bitcoin reach the dollar,” he said.
During the quarantine caused by the Corona virus, US officials became convinced that they could print dollars without restrictions, regardless of their foreign exchange reserves. This allows them to continue operating without large consequences and despite large deficits.
But how did this work for the US Fiat currency? Large US government support packages to fight the Corona virus have increased pressure on the dollar. The dollar has been declining since the launch of the first US government bailout. Last month, the dollar index reached its lowest level since 2018.
This event also contributed to the upward trend of bitcoins. The beginning of the rise of bitcoin from April can be considered as a proof of this claim. Investors during this time turned to Bitcoin to use it as a safe haven for their investments. Eventually, injecting money into the economy boosted the bitcoin surge and the king of digital currencies broke the $ 20,000 resistance.
However, the passage of the $ 900 billion bill, a new support package introduced by US lawmakers, could save the dollar and push up the price of bitcoin even more.
Entry of institutional investors
Michael Saylor, CEO of MicroStrategy, a publicly traded company, recently announced that his company had converted about $ 425 million of its liquidity into bitcoin. The announcement caused a wave of astonishment among companies around the world. Many believe that this news has led some of the big Wall Street companies to buy bitcoins.
Silver has been a critic of Bitcoin in recent years, and in 2013, announced that the last days of Bitcoin were near. Now, however, he is a fan of this digital currency. Micro Strategy did not give up after buying $ 425 million in bitcoin. This month, the company announced again that it had bought $ 700 million worth of bitcoins.
Square, owned by Jack Dorsey, is one of the companies that bought Bitcoin. Square announced in early October that it had bought $ 50 million worth of bitcoins. MassMutual, one of the largest insurance companies in the world, One River Asset Management and Ruffer Investment Company are other big names that have entered the Bitcoin field.
Guggenheim also announced that it bought bitcoins when the price of bitcoin was $ 10,000. Scott Minerd, one of the company’s top executives, said in a statement that the price of bitcoin should reach at least $ 400,000.
Former White House spokesman Anthony Scaramucci, a senior executive at SkyBridge Capital, recently wrote in a letter to the Securities and Exchange Commission that he had bought about $ 25 million worth of bitcoins through his company.
Institutional investors can be considered as one of the main factors that have increased the price of bitcoin; Inflows from these wealthy people have kept the bitcoin price going up.
Howing and Gary Skill
This year saw the third bitcoin move, and since then the bonus per block has been reduced from 12.5 points to 6.25. Hawing is one of the protocols that controls the supply of bitcoins and ultimately keeps the total supply constant at 21,000,000 units.
Because supply and demand are the main determinants of bitcoin pricing, Howing has a major impact on price. In May, Hawing accelerated the uptrend in bitcoin. Gary Skill, on the other hand, plays a key role in the current demand for the Bitcoin market.
Gary Skill is an investment firm whose core business revolves around asset management and is managed by Barry Silbert. About $ 15.7 billion in bitcoins are stored in the company’s bitcoin investment fund, according to the latest announcement from Skill.
There is no news of cheap bitcoins in Gary Scale Bitcoin Mutual Fund. Bitcoins are traded as a share in Skill Cashier and their price is different from the price of bitcoins in instant markets; Because in funds like GaryScale, the investor is required to pay a premium to buy each share. In recent months, bitcoin trading in GrayScale has grown significantly.
Critics become supporters
Increasing money printing by the world’s central banks has given Wall Street economists and billionaires a bleak, scary, and bloated outlook for the future of the global economy.
On the other hand, the same people who used to be known as Bitcoin critics now look at this digital currency as a store of real value.
Ray Dalio is one of them. The famous billionaire, who is the founder and CEO of Bridgewater Cover Fund, has been taking a softer view of bitcoin for some time. He used to say that bitcoin is neither a currency nor a reserve of value, but now he acknowledges that bitcoin is a substitute for gold.
George Ball, CEO of Sanders Morris Harris and one of the most famous Bitcoin critics, stopped criticizing Bitcoin earlier this year. In a statement, he called Bitcoin an extraordinary long-term investment.
“Investors and traders need to align their portfolio with bitcoin and dedicate part of it to bitcoin,” he said.
[بیت کوین] It is something that governments cannot ignore and it is not worthless.
Changing the attitude of investors and creating positive views in their minds is considered a positive factor; Because it attracts more investors into the field.
Fear of loss by micro-investors
Over the past year, the interest in searching for the English phrase “bitcoin” on Google has tripled; It can be said that this means the readiness of small investors to enter the market.
The interesting thing is that despite tripling this amount, it is very small compared to the peak of Google searches. Of course, the role of institutional investors in the bitcoin market should not be overlooked. Further growth is likely if the fear of losing (FOMO) prevails in the Bitcoin market.
Bitcoin and participation in Defy
The Decentralized Finance Division (DeFi) has grown significantly in 2020, thanks to an insane increase in the cultivation fever. Simultaneously with this increase, we saw the opening of Bitcoin on the Ethereum network.
The chart above shows that many people seek to make a profit by locking their bitcoins into defy protocols. This has increased the buying pressure in the bitcoin market and increased its price. More than 140,000 bitcoins are currently locked in the Ethereum network. That means about $ 3.3 billion in bitcoins!