Whether you’re crypto crazy, bedazzled by blockchain or alt coin agnostic, you can’t deny, crypto is one heck of a thrill ride!
As you’re probably already aware, crypto is arguably the most volatile financial market on the planet and if the proof really is ‘in the pudding’, as they say — then this week has certainly seen its fair share of crypto calories. It’s been another tumultuous week for the King of Crypto — Bitcoin — let’s briefly investigate the what, why and how…
Crypto & Bitcoin in a Nutshell
If you’ve only just emerged from the rock you’ve been hiding under for the past 10 years, here’s a catch up. Crypto is an umbrella term for digital tokens or coins. Each crypto token — of which there are over 2000 — has a different, usually fairly unique, purpose, but cryptocurrencies are a little different. These guys are essentially digital assets created to work as an exchange mechanism, using rock-solid cryptography to secure financial transactions. Breathtaking, yes. World-changing, most certainly. But then again, it is still early days…
Bitcoin is to crypto what Iron Man is to the Avengers (no spoilers!)… Sure, everyone likes Captain America, the Hulk and Thor, but they wouldn’t be anywhere without Tony Stark’s Iron Man. Way, way, waaaay back in 2009, Bitcoin put crypto and blockchain on the map, and the landscape hasn’t really changed to this day. Bitcoin accounts for a mammoth 60% of the total crypto market cap, with the Ethereum Foundation’s Ether (ETH) coming in at number two with a relatively measly 10% market share. Bitcoin is a behemoth and when it sneezes, the whole market catches a cold.
…But, if this week is anything to go by, Bitcoin has shaken off its spring hayfever… which means there aren’t so many sneezes.
Bitcoin Booming — What Happened?
Good question! Crypto is a tricky market to predict. It’s still, largely, governed by speculation and the impact of FOMO — fear of missing out — or FUD — Fear, Uncertainty and Doubt. This week, Bitcoin climbed up over the $8000 mark for the first time since 2018, rising a gigantic 60% — or just over $3,000 — in the last month alone. Wow.
Those bullish on this market would be forgiven for getting excited and all nostalgic about the heady days of 2017, when Bitcoin rocketed to its all time high of $18,400, fueled mainly by a sprinkling of buoyant capital markets, a dash of speculation and roughly 250ml of turbulence, owing to the tense political climate in Asia — Trump Vs. Kim Jong Un, if you can recall?
This time it’s a bit different. While regional tensions are still high, we’re not as close to nuclear Armageddon as we appeared to come back in 2017 (phew). The biggest geopolitical issue currently is, of course, the US/China Trade War.
So, if it’s not geo-politics, what is causing the price to rise faster than Usain Bolt chasing a bus?
Why is Bitcoin Going Through the Roof?
Here’s a few potential reasons:
- Anticipation of the upcoming “Halvening” — it’s a little complex, but Bitcoin is introduced to the market as a reward for miners who validate blockchain transactions. Right now, that reward is set at 12.5 BTC, but, in May 2020, that reward will be reduced to 6.25 BTC (half), so the total number of BTC introduced to the market on a daily basis will be lower. Which makes now a little bit like rush-hour after work, everyone’s in a hurry!
- Greater access to the asset — there are more and more access points for Bitcoin buyers, sellers and traders, today. Demand is higher, supply is lower. You know the routine. Did you know that you can even fund your TIOmarkets account with Bitcoin? Well, now you do! Try it!
- There are more places to use crypto — more and more businesses are adopting crypto in some form, which brings positive headlines and fuels FOMO. Just a couple of days ago, US dollar-pegged stablecoin provider, Gemini, reached an agreement with payment network Flexa — which basically means that most US stores will now accept Bitcoin or other cryptocurrencies as forms of payment.
- Newbie crypto investors — It is also a fact that a new breed of investor is starting to sit up and take note of Bitcoin and what other crypto assets have to offer, as the price continues to rise more and more traders who found their feet in Forex, commodities, stocks, etc. start to move over to this newest kid on the block…chain.
So, hopefully that gives you a little insight into the booming price trend of Bitcoin. It’s an asset definitely worth taking a look at, as is the rest of the crypto-sphere.
After all that, if you’re still not into crypto, or if uncertainty in the GBP markets, or Trump’s ongoing battles with Xi Jinping aren’t interesting to you, no worries! At TIOmarkets, we give you access to every tick of more than 120 instruments, from currencies and commodities, to indices and cryptocurrencies. Whatever you’re looking for, we have something for you! Join the fun, now!