Why is bitcoin going up? Is this a mystery? Bitcoin (BTC) was born on Halloween in 2008, and on Halloween in 2021, it set new price records to reach over 66.000 USD as a great birthday gift. However, BTC experienced an unstoppable drop that was heartbreaking for many investors before that. So, what factors determine bitcoin’s rise and fall, and is this number one cryptocurrency eternal? Following the bull and bear market rule, this cycle occurs with BTC within a few months of mid-2021. Is the BTC bull market at its peak in November 2021 or not? Let Hanfincal pull back the curtain to unveil some of the lesser-known facts about this powerful coin.
1. Bitcoin in the first ten months of 2021
BTC’s price fluctuation over the first ten months of 2021 is fascinating. This excitement occurs with people who do not purchase BTC.
On the contrary, BTC brought heartbreaking danger. It forced many investors into bankruptcy, and they had to sell off all the amount of BTC they were holding. After only a few months of struggle, BTC was reborn and reached its highest price ever, up to $66000, nearly breaking the previous record set in April of this year. The specific information is as follows:
- In mid-April 2021, it reached a record of $62,000 per coin.
- June 2021: dropped to $30,000 per coin for some reasons from Tesla and China.
- Oct 20, 2021: a new record of $66700 per coin was set. That is an unsustainable level, and a drop is likely soon.
The depreciation of BTC led other cryptocurrencies such as Ethereum and Dogecoin to lose 25% and 29% of their value in the second half of 2021, respectively.
2. What is causing bitcoin’s steep drop in mid-2021?
CNBC states the price of BTC fell to $30,000, more than 30% of its value, and continued to experience a week of selling.
Ether, the leading digital currency in the Ethereum blockchain network, also fell sharply, sometimes falling below the $ 2,000/coin threshold or losing more than 40% of its value in less than 24 hours. The big question is, why such a steep drop? Here are some fundamental reasons:
2.1. Institutions do not support
- Coinbase – a new cryptocurrency has been born. On the day of Coinbase’s IPO (Initial Public Offering) on April 14, 2021, the price of BTC fell dramatically. Because of Coinbase’s brilliant pitch, BTC has lost roughly half of its value. This pattern was repeated when El Salvador legalized BTC on Sep 7, 2021. Wall Street is experiencing risk aversion, and hedge funds sold off many cryptocurrencies, causing prices to plummet.
- China has tightened its cryptocurrency industry to protect the environment and prohibit mining it in any form. More than that, banks and payment companies like Alipay have to avoid dealing with cryptocurrency. The United Kingdom also has a hand in banning the cryptocurrency exchange Binance from engaging in activities or providing services that are not governed by the laws of the United Kingdom.
- Tesla CEO – Elon Musk – has stated that Tesla will no longer accept this currency as payment anymore. As a result, this company’s stock dropped more than 3% on Wall Street in less than 24 hours, which also led to the drop off of BTC price at that time.
2.2. Investors’ psychology
Shares of the Ark Innovation ETF (Exchange-Traded Fund), a high-growth equity fund run by famed CEO Cathie Wood, are down more than 30% from their February high as of May 2021. Therefore, investor sentiment has a significant impact on financial markets.
Specific examples include:
You have a large number of stocks or cryptocurrencies in your possession. However, external factors such as the market and press rumours exaggerating unfavourable information are inconsistent and easily influenced.
When there is some bad news from the outside that could affect the market, you will most likely feel unsafe and sell all of your stocks or coins. That has a significant impact on the market and causes the price of that item to fall dramatically.
2.3. Bitcoin market manipulation – whale walls
Finally, BTC is just a playground for gamblers. That expressed via Elon Musk’s announcement that Tesla will accept cryptocurrency payments, causing BTC to reach new highs and people to speculate that this money is being taken in a mainstream manner until the Tesla CEO himself protests that.
The change caused BTC to fall in value, and rumors that BTC would be accepted as a mainstream currency became speculative and opaque.
The price of BTC has made the manipulation of whales inevitable; this is also the obsession of investors. On Jul 19, 2021 whales moved approximately 79,000 BTC to Coinbase to create a sell wall and induce a price drop.
Usually, this amount of BTC is bought and sold on the open market, and however, its price did not fall to expected levels. The manipulation technique successfully lowered the price of BTC from around $32,000 to just under $30,000. The newcomers panicked and sold their bitcoins, but smaller retail buyers purchased many of them, and more accumulation on-chain continued.
3. Bitcoin’s optimistic vision
Despite seemingly experiencing brutal bull and bear battles, BTC remains the world’s leading cryptocurrency. Its price is gradually recovering as well, and it has several times hit a record high, with the subsequent record breaking the previous form.
In general, the value of BTC has increased significantly. Predictions from crypto experts about BTC’s bright future still have a chance of coming true. The following optimistic outlooks may further strengthen BTC’s position:
- Elon Musk, CEO of Tesla, has reaccepted Tesla to help customers pay with BTC. That is a massive relief for BTC right now, as its value has recovered after a nearly 50% drop in value in June 2021.
- After Elon Musk announced with Tesla in October 2021, unicorn technology, Paypal also returned to accepting BTC, doubling the chances of BTC’s resurgence.
- “The global market is declining,” according to Kraken exchange analysts in a monthly report, in part due to concerns about a potential financial crisis caused by the company’s liabilities. According to the report, this could help BTC become more resilient to traditional market turmoil. Morris believes that BTC’s next rally could be fueled by increased acceptance by Wall Street and traditional financial institutions.
- Along with that, BTC has risen as a result of positive views from US regulators. Late last week, US Federal Reserve System Chairman – Jerome Powell – stated that he has no intention of prohibiting the use of cryptocurrencies.
- On Oct 5, during a hearing of the House Financial Services Committee, Gary Gensler, Chairman of the US Securities and Exchange Commission (SEC), stated that he has no plans to ban cryptocurrencies and that Parliament would not determine any such ban.
BTC’s future is unquestionable. If you’re excited about this potential market but don’t know how to mine a BTC for yourself, here’s a reputable exchange that can help you take your first steps into this massive market. For simple steps, you can buy Bitcoin with a credit card or a debit card.
Found the answer to why is bitcoin going up, making you have a more multidimensional view. A few months after China sought to phase out cryptocurrency mining, dozens of companies that were once models of new energy consumption have become “disruptors” in the world’s second-largest economy. BTC is also a haven for gamblers; market fluctuations heavily influence the rise and fall of this cryptocurrency. However, according to cryptocurrency experts, BTC will continue developing and dominating the world in the coming years.
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