Bitcoin Price Surge: What Caused Bitcoin’s Surge?
The past weeks have been an awesome one. I love to see the bitcoin price surge. But I’m sure, like me, you are interested in what led to the recent rise.
After a couple of research, I’ve found out that it is quite impossible to attach this spike to a particular cause. There currently exist several theories, which tried to give a reason for the rise. So, why don’t we start by learning more about these theories?
Bitcoin Price Surge and the COVID-19 Pandemic
We should probably start by revisiting the reasons anyone would want to invest in bitcoins in the first place. I mean, why invest in cryptocurrency in the first place?
We know we all need a safe means of trade; apart from the government and financial institutions. Cryptocurrency provides this. Thus, reducing counterparty risks. Hence, bitcoin stands as a good hedge during financial crises.
Well, there is an economic situation due to the pandemic currently. There’s even been a drop in the Dollar. So, it is easy to understand why assets like gold and bitcoins are receiving more attention. And hence, the price surge.
But, this isn’t the sole explanation for the rise. We have some other proposed causes. And we believe the surge is as a result of these causes overlapping.
Proposed Reasons for the Price Surge
First on our list involves a new development known as the decentralized finance (DeFi). These so-called platforms offer traders some gains. The belief is that these traders have been putting these gains into the leading cryptocurrencies. And this, in turn, has been the reason for driving up the prices of Bitcoin and Ethereum.
Another theory involves a letter from the Office of the Controller of the Currency. This letter stated that banks can now provide cryptocurrency custody services for customers. Now, savvy investors believe this new move will be the beginning of even more lucrative cryptocurrency investments. And hence, the rush into Bitcoin, leading to the price surge.
Finally, there is the belief that this surge is part of the inherent profile of Bitcoin. In order words, we’ve always known that the Bitcoin’s price will rise. This belief is consistent with the Elliott wave theory of price movements.
However- still on the above analysis- Bitcoin is expected to reach- and stay for a while- at points called the “resistant band”. Of this was the recent $13,500, which made it look like Bitcoin was never going to reach up to $16,000. But, now that it’s above this resistance, we believe it should keep rising till its next at $19,800, where we may have to wait a bit before the next surge.
Still, allow me to put this forward here, that there still exists more research to be done on this topic. And hence, the above reasons are not definitive proclamations of why the surge happened.
More disturbing still are the speculations that the current momentum could lessen soon and this could happen before the next resistance is reached. Thus, leading to a drop as fascinating as the present surge. In other words, the bitcoin price surge could be temporary.
Now, I’m sure my last statement brings up some questions in you. And this leads us to the next section.
Should You Invest in Bitcoin During this Period?
With the fears of it being a temporary surge, I understand why anyone would ask this question. However, we know bitcoin has always been volatile. And we know even with that, it has managed to retain its lucrative returns.
One sure thing is Bitcoin will keep growing into the future. And even a comprehensive prediction on bitcoin states that Bitcoin should hit $398,000 by 2030.
So, here’s my advice. With or without the surge, investments always come with its risks, especially in the case of cryptocurrencies. With this in mind, your best bet lies in thinking long-term.
And if you are unsure of where to start, we at Cloudfaremine are here to help you get started with a means of cryptocurrency investments. We provide you a platform to mine bitcoins without having to go through the stress of private setups. Invest today- especially today with the current surge- and start earning more on your bitcoins.