In 2021, the first cryptocurrency hit its all-time high twice. In November, the coin rate was $ 69,000. This attracted public attention and people who were never interested in digital assets and blockchain came to the crypto industry. At the same time, many still cannot understand why the price of the first cryptocurrency is growing. In this article, we will try to figure out what drives the rise in bitcoin prices.
History and application of BTC
It’s no secret that bitcoin appeared thanks to a person or a group of people under the pseudonym Satoshi Nakamoto, and the first transaction was carried out in 2009. The first purchase of a real product for Bitcoin occurred in 2010, then the user bought 2 pizzas for 10,000 BTC. After that, the popularity of the asset began to grow, as it was used in the purchase of prohibited items. But this did not last long, and after a while, bitcoin and altcoins began to be used for legal transactions. Digital assets have become a full-fledged means of capital accumulation, payment units. Many companies accept cryptocurrency as payment for goods or services. Many people still believe that using crypto means staying anonymous online. However, this is not the case, information about transactions is publicly available and is stored on the blockchain.
Why bitcoin is expensive
Bitcoin is the first cryptocurrency to gain public trust. However, there are other factors besides this:
- Limited emission;
- Expensive system maintenance;
- The influence of whales;
- Growing demand for digital assets;
- Altcoin growth;
- News.
We will tell you more about each item in more detail.
Emission
Bitcoin has a limited emission. This is a significant difference from fiat currencies. Already mined 90% of the total issue of 21 million. This affects the price quotes of the first cryptocurrency. In addition, cryptocurrency in general is becoming more popular and more affordable. There are more and more cryptocurrency exchanges and platforms where anyone can buy or sell crypto. Therefore, trading has become much more accessible. Cryptocurrency is a good investment and earning tool. As a result, people have confidence in the future of digital assets.
Expensive system maintenance
Coin mining costs and transaction fees are increasing. But there are other costs of maintaining the system as well. In 2021, electricity consumption for transactions and other operations in the bitcoin blockchain is 182.12 TWh. This is roughly equal to the energy costs of a country like Thailand.
Demand
Demand is influenced by many factors, such as people’s interest. The more buyers, the higher the demand becomes. In addition, many people do not trust Fiat. Society wants to protect itself from inflation and cryptocurrency helps in this.
Whale investment
Different people invest in bitcoin. These can be companies, foundations, governments, and ordinary users. This shows the confidence of large investors who would not risk their money just like that.
Among the large companies in 2021, MicroStrategy is the largest. The company develops software, does business analysis, and provides cloud services. The firm was the first publicly traded company to invest large sums in digital assets.
Altcoin growth
Bitcoin became the first digital coin in the world. After a while, alternative coins began to appear – altcoins. Not everyone has succeeded in achieving any success, but some projects have succeeded. In 2021, the capitalization of bitcoin exceeds the volume of ethereum (the second largest coin by capitalization).
News
Political or economic news can easily affect the price of digital assets. News can be as follows:
- Statements of the leaders of the countries on the attitude to digital assets;
- Information from large companies and organizations that plan to buy or sell cryptocurrency;
- Expressions of popular people, predictions;
- News about the economic problems of different countries;
Take, for example, the news that recently came from China that Chinese companies are now prohibited from providing any crypto exchange services. After this news, the price of cryptocurrencies began to decline sharply.
The future of bitcoin
Bitcoin continues to recover from the fall. Now it is trading at $56 659, so experts began to predict further growth. For example, the Wallet investor analytical service predicts that by the end of 2022 the price of the first cryptocurrency will be $94 755, and in five years $219 001.
Conclusion
Last year, the global economy was hit hard by the pandemic. People need a stable and strong financial instrument. Bitcoin can become one. The growing confidence in the coin reflects its value. Analysts at JPMorgan believe that investors saw Bitcoin as a hedge against inflation. In addition, the rate was influenced by the interest of institutional investors, large expenses for maintaining the blockchain, increased demand, including from ordinary users. But in order to earn digital assets, we can recommend you a trader’s assistant – the RevenueBot trading bot. The service provides the opportunity to create trading bots on the largest cryptocurrency exchanges: Binance, Bittrex, Bitfinex, Exmo and others. Creating a bot is free of charge, the service will not take commissions until the client begins to make a profit from trading the bot. With the help of deep settings of the bot, the service’s clients implement trading strategies that are problematic to experience in normal trading. We will immediately indicate: the bot does not have access to customer funds on the exchange, but trades using API keys, that is, the account will remain out of access. RevenueBot has over 28 thousand customers who earn money thanks to trading bots.
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