Cryptocurrency experts and investors will have been rejoicing over the last few days, as the festive period has proved to be even more joyous for them. Bitcoin, which was first mined in January 2009, and therefore celebrates 12 years of existence this month, marked the milestone by smashing the $30,000 barrier. It was trading at $20,000 as recently as 15th December, therefore taking just 17 days to gain $10,000 in value. The rise has not stopped there – Bitcoin went as high as $34,000 on 3rd January, and even though it has now fallen back to around $30,000, the indications are that 2021 could be the year where cryptocurrencies finally break into mainstream finance.
Bitcoin’s rise in 2020 has been stunning. It started the year at $7,200, and is ending it at $30,000, which is a rise of nearly 300%. For comparison, the Nasdaq index rose by 43% in 2020, while the S&P rose by 16% and the Dow by just 7%. There are various reasons for this high growth in bitcoin’s price, and also why we can expect it to be sustained over the medium-term. Bitcoin is becoming a valuable currency hedge, especially as central banks all over the world have signalled that they will continue to pump money into their economies. Given that there is always a finite amount of Bitcoin in the market, this means that its price will rocket if investors begin to turn to it as a currency hedge. We have already seen how big institutional investors have come into Bitcoin this year to hold it as an asset, which has been one of the major reasons for its price rise.
Before looking at other factors behind this price rise, it is also important to consider the implications this will have on daily life. One of the biggest criticisms of bitcoin and other cryptocurrencies has been that they are not very useful in daily practical life. However, that has changed over the last few months. Payment providers such as Square and PayPal have announced that they will support cryptocurrencies on their platforms, allowing crypto investors and owners to be able to conduct regular transactions online using their cryptocurrencies. At the same time, other online merchants and services have also begun using cryptocurrencies to attract customers. Foremost among these has been the online casino and gambling industry. There are a number of crypto casinos in existence today, where users are able to place bets and receive their winnings in the form of cryptocurrencies. This allows them to fully utilise the benefits that crypto brings, including decentralization, easy audit trails, reliability, fast transactions, and security. Using crypto has served to make online gambling markets fairer, so that it is nearly impossible to manipulate bets or games themselves, while crypto transactions are also far more secure, meaning that they are impossible for outsiders to hack.
Thus, the price rise that we have seen in bitcoin will serve to benefit many people who have already begun using crypto on a daily basis. It will also bring in many new investors, which will again drive up the price. There are many experts who believe that we are set to see bitcoin hit $100,000 in the next few years, given the size of the global currency hedge market and the number of bitcoin in circulation. Of course, there are bound to be price swings – bitcoin was as low as $3,800 as recently as March 2020, so investors will need to have enough faith in the market to ride out those times. However, almost every expert in the space is of the opinion that you should hold on to your bitcoin if you own any in 2021, since the likelihood of a sharp price increase is much higher than that of a fa