Cryptocurrency
aficionados and investors have been keenly following the moves of Bitcoin, the
digital currency market’s pioneer and bellwether. Bitcoin is displaying
symptoms of a potential bull run after seeing unprecedented price rises and
subsequent falls over the years. We examine the main causes for the renewed
interest in Bitcoin, as well as the variables that may contribute to another
large price gain.
Adoption in
Institutions
The increased
institutional use of cryptocurrencies is one of the key drivers of Bitcoin’s
recent recovery. Institutional investors, such as hedge funds, asset managers,
and publicly traded firms, have begun putting money into Bitcoin. The bitcoin
market gains credibility and legitimacy as a result of this institutional
involvement.
High-profile
endorsements and investments from firms such as Tesla and Square have gotten a
lot of attention in the media, helping to shift the perception of
cryptocurrencies from speculative assets to real stores of value and investment
options. Institutional participation frequently results in increased liquidity
and stability in the bitcoin market, which might attract more investors.
Factors Affecting the Economy at Large
Global
macroeconomic factors have played a critical role in driving Bitcoin interest.
Uncertainty in traditional financial markets has encouraged investors to seek
alternative assets for diversification and as a hedge against inflation, which
has been exacerbated by the COVID-19 epidemic and accompanying economic
stimulus measures.
Bitcoin, also
known as “digital gold,” is considered as a safe haven asset by
certain investors, analogous to physical gold. Because Bitcoin has a fixed
number of 21 million coins, it is resistant to inflationary pressures, this
belief has gained popularity during times of economic crisis and currency
devaluation.
Institutional Infrastructure Development
With the
creation of institutional-grade infrastructure, the bitcoin ecosystem has
evolved dramatically over the last few years. The addition of Bitcoin futures
contracts on regulated exchanges such as the Chicago Mercantile Exchange (CME)
has made it easier for institutional investors to obtain exposure to Bitcoin
while remaining compliant with regulatory regulations.
In addition to
futures contracts, the emergence of cryptocurrency custodial services,
over-the-counter (OTC) trading desks, and cryptocurrency-focused investment
funds has made institutional entry into the market more…
