Bitcoin started at $7,200 back in early 2020. It finished the year at $30,000, up around 300%.
The boom proceeded through 2021 full-steam: on Jan. 2, for the first time, bitcoin broke through $30,000, and just hours later broke $33,000.
New, Constant All-Time Highs
A multitude of narratives have driven Bitcoin’s rise to heights that haven’t been seen before. The first big catalyst is adoption of Bitcoin by prominent payment processors PayPal and Square. Square, in particular, made a big splash by purchasing $50 million worth of Bitcoin earlier this fall.
Another catalyst may be increased purchase of Bitcoin by institutional investors. It seems like FOMO of Bitcoin is being driven by funds worth hundreds of millions of dollars rather than retail investors.
If the bitcoin price spike in late 2017 was powered by crypto newbies investing in without doing their homework, institutional buying has guided the 2020 journey. Although bitcoin is again bought by newcomer institutional buyers, several individual Wall Street names and consumer-facing payment firms have now warmed to crypto.
The opinion today, in the very least, seems to be: Bitcoin is not going anywhere. For 10 years, it has operated and will continue to operate as it has.
The same cannot be said about all of the other multitudes of cryptocurrencies (‘altcoins’) with utter clarity, save maybe ether (ETH), the token of the Ethereum network.
XRP, the cryptocurrency operated by Ripple Labs, has been for years among the top four cryptocurrencies by market value, but is now under fire after Ripple Labs was sued by the SEC, arguing it sold a $1.3 billion offering of unregistered securities.
Context for Bitcoin’s Rise
And the increasing recognition of bitcoin as an asset that trades dependent on macroeconomic factors meant that it offered investors and commentators as good a lens as any to interpret the monumental economic events of the year and the increasingly evolving financial environment.
Bitcoin has certainly had a fantastic year, slashing $24,500 on Christmas Day and putting up another all-time record through the new year.
The tide begins to escalate as the work-from-home dynamic fuels the digital revolution, and 2021 increasingly seems to be an action-packed year for the next step of Blockchain network development.
Hedging with Bitcoin Against the Dollar
Since its inception, Bitcoin has been considered the future of money. Many that back Bitcoin argue it makes it possible for purchases around the globe to provide a much faster, low-fee payment mechanism.
Bitcoin may be traded in conventional currencies, although it is not financed by either the government or the central bank; in particular, the dollar exchange rate draws new buyers and brokers involved in currency investment.
Indeed, one of the key reasons why digital currencies are growing, like Bitcoin, is because they can serve as an alternative to conventional domestic monetary cash and gold-like resources.