Bitcoin Worth: 5 Causes Bitcoin Cryptocurrency Costs Are Going Up

The cryptocurrency market has continued to boom despite the global pandemic that is devastating all of the world’s major economies.

During this pandemic, many crypto startups sprang up in space to meet the ever-increasing demand for Bitcoin and similar cryptocurrencies.

For example, CoinSwitch Kuber recently announced the raising of $ 15 million (Rs 109 crore) Series A funding from leading global fintech investors including Ribbit Capital, Paradigm, Sequoia Capital India and well-known angel investor Kunal Shah von CRED on.

The market capitalization of cryptocurrencies, fueled by the growth of Bitcoin, recently passed the $ 1 trillion mark. Of these, Bitcoin has been on an upward trend for some time and is responsible for around 69% of the total market value.

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Half a year ago a Bitcoin was priced at ~ £ 6.00,000, and today Bitcoin is priced at ~ £ 25.00,000, a price increase of around 400%. Ether, the second largest cryptocurrency in terms of market capitalization, hit a new high of over £ 1.00,000 and rose over 1,000% in value in one year.

Similarly, many cryptocurrency prices have risen and investors are wondering why. Here are five reasons why cryptocurrency prices are rising:

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Institutional adoption

Cryptocurrencies, especially Bitcoin, are currently seen as a safe haven against market volatility and inflation. The current social and economic climate also means that people hold less cash and can hedge against market fluctuations.

Recently, there has been a trend of public corporations converting their cash holdings into cryptocurrency. Square, an American payment company, bought $ 50 million worth of bitcoins. Following this, Microstrategy, a publicly traded company in the United States, converted cash reserves worth $ 425 million into Bitcoin, as it is a better store of value.

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Many companies have now followed this trend. The corporate giants’ trust in cryptocurrencies has given the company more value as a store of currency and value.

Paypal & cryptocurrencies

In October 2020, the global digital payments company PayPal announced that it would introduce functions to buy and sell cryptocurrencies on its platform.

The launch included four main currencies traded, namely Bitcoin, Bitcoin Cash, Ethereum and Litecoin. PayPal has also announced plans to allow transactions in cryptocurrencies.

It is known that PayPal has 350 million users who are now able to use crypto as a means of payment. In addition, the 30 million merchants have the option to receive payments in crypto.

PayPal was one of the critics of cryptocurrency as a sustainable currency. Now it’s one of the biggest names jumping on the bandwagon. Along with others and the support of PayPal, there was greater demand for the asset class, which contributed to its price increase.

In addition to PayPal, the company also owns another popular payment platform, Venmo, which will expose another 40 million users to crypto payment. While these platforms are new to crypto, some other platforms are already making crypto payments wider.

As several private investors are trying to use cryptocurrency as a medium of exchange, many governments are also trying to regulate the market.

Many countries like Japan, USA, Germany etc. have taken a positive stance towards cryptocurrencies.

Bitcoin halves driven scarcity

It is not new that most of the cryptocurrencies in the market have limited supply. Bitcoin is also one of them. The third Bitcoin halving took place this year.

The Bitcoin Halving is a major event on the Bitcoin network that happens every four years.

The bitcoin network works because it brings new bitcoins to the market through a process called bitcoin mining. Bitcoin miners do this mining by checking Bitcoin blocks, which are just groups of Bitcoin transactions.

Every 10 minutes a miner who can review a block of transactions and add it to the Bitcoin network receives a certain number of Bitcoins as a reward.

Currently this reward is 6.25 BTC per valid block mined. However, that reward per block is reduced by half approximately every four years or after every 210,000 blocks mined. This phenomenon of reducing the Bitcoin block reward by 50% every four years is known as the Bitcoin halving.

It also doubles the ratio of inventory to flow (total available currency: total currency in circulation), which is extremely rare.

The halving is one of the most important factors that add to the price of Bitcoin.

Since there are only 21 million Bitcoins in total, the market currency is less in circulation as the reward decreases. And the more people become aware of the asset’s scarcity, the more demand increases, resulting in a higher price.

Since Bitcoin holds more than half of the market capitalization, the Bitcoin price fluctuation can affect other currencies.

Easy access for the public
Cryptocurrency is a digital currency that can be used both as a store of value and as a medium of exchange. While it has only just gained attention as a legitimate payment method, it has established itself as a new asset class over the past decade.

Even if the public is unwilling to use it for transactions, many want to convert their money to crypto because they believe that due to its deflationary nature, it is a better store of value and a hedge against inflation.

In India in particular, investors saw a significant increase after the RBI ban on cryptocurrency was lifted.

Many platforms have launched and received funding in this area to make crypto investments accessible. One such platform is CoinSwitch Kuber, which is gaining over two million users within just six months of launch.

As cryptocurrency becomes more accessible to the public, more and more retail investors want a stake in the asset class and are willing to pay more.

Bottom line
If you think it is too late to invest in cryptocurrencies because of the rising prices in the crypto market, understand that this is just the beginning.

As more and more countries try to regulate the market, cryptocurrencies become mainstream.

Disclaimer: This is not editorial content and TIL hereby disclaims any warranties, express or implied, relating to it. TIL does not guarantee, endorse or endorse any of the above content and is in no way responsible for it. The article does not constitute investment advice. Please take all steps necessary to ensure that all information and content provided is correct, updated and checked.

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