What is going on with the Bitcoin price (BTC) right now has not been seen since the crypto hype at the end of 2017. The price of a Bitcoin is climbing to a new record all-time high almost every hour and is currently quoted at 28,250 US dollars. Over the week, the price has risen by more than 17 per cent. Why there is currently no stopping it and why the 30,000 US dollar mark could also be reached quickly.
The Bitcoin price (BTC) makes all other cryptocurrencies look old. No other digital asset is attracting as much fresh capital as digital gold. With a market capitalisation of over half a trillion US dollars, Bitcoin is reaching a dizzying height. For comparison: If Bitcoin Bitcoin System were a nation, and one were to equate its market capitalisation with GDP, it would currently be in 26th place. For example, Austria, with a GDP of 446 billion US dollars, would not be as strongly capitalised as Bitcoin.
Why is the Bitcoin price (BTC) rising inexorably?
The reason why the Bitcoin price is unstoppable is simple. As we have explained many times before, institutional investors are now entering the market. The „big money“, i.e. hedge funds, insurance companies, family offices, etc., are now entering the market. The perception has turned 180 degrees. Whereas Bitcoin was previously perceived more as speculation, it is now considered by investment professionals that it is a risk not to have Bitcoin in one’s portfolio.
As in the traditional financial sector, these professional players determine how the prices develop. For example, not only the Nasdaq company Microstrategy has bought Bitcoin for another 650 million US dollars, as CEO Michael Saylor announced via Twitter on 21 December, but also several traditional investment houses.
Bitcoin demand cannot be stopped
Whether it is the American insurer MassMutual (BTC investment: 100 million US dollars), the hedge fund Guggenheim (BTC investment: 500 million US dollars) or most recently this week’s repurchase from the crypto asset manager Grayscale (BTC repurchase: 542 million US dollars): virtually every day, institutional investors around the world are buying up Bitcoin holdings. The scarce supply and the rising demand lead to a Bitcoin price that currently only knows one direction.
Private investors play only a minor role in this. For this reason, Bitcoin is also outperforming most other cryptocurrencies, because the big money is primarily flowing into Bitcoin and not into smaller cryptocurrencies. This is also reflected in the sharp rise in Bitcoin market dominance, which currently stands at over 70 per cent.
Investment emergency and inflation expectations strengthen Bitcoin momentum
The flight into Bitcoin is reinforced by the prevailing investment emergency. Due to the massive expansion of the money supply by the European Central Bank (ECB), there are practically no more positive interest rates on euro government bonds. Even a ten-year government bond on heavily indebted Portugal means negative interest rates for investors.
A reversal of the ultra-loose monetary policy is not in sight, as this would massively endanger the stability of the entire euro area. It is becoming increasingly likely that there will be real economic inflation in the future in addition to the already prevailing asset inflation. The ECB is thus one of the biggest macroeconomic support factors for the Bitcoin price.
Bitcoin price (BTC) soon at $30,000?
Of course, no one can predict exactly when Bitcoin will reach the US$30,000 mark, but it could happen very quickly. At the current rate, even this year. On the other hand, it must also be said that the market is completely overheated. A healthy consolidation, in which the bitcoin price drops by 20 – 30 percent, is absolutely within the realm of possibility. However, this should only last for a certain time, as it is no secret that the money of many institutional investors will not come until 2021. So support is provided.
2021: These trends are on the agenda
Bitcoin made a clear statement with its year-end rally: The cryptocurrency, once attributed only to geeks and nerds, has come of age and is finding its way into the institutional sector with broad mass acceptance. But what are the topics on the agenda in 2021 besides the pure bitcoin price development? What underpins the recent price rally and what hurdles are there for Bitcoin and the crypto sector to overcome? Which crypto and blockchain trends (also outside of Bitcoin) will determine the year 2021? We have summarised the top trends for 2021 in the current December issue of Kryptokompass magazine.