There is a good deal of debate about what drives the BTC price and what does not. Here are some thoughts on this.
In the last few weeks, the milestones are falling one after the other. While Bitcoin was (briefly) at less than $10,000 at the beginning of September, the world’s leading crypto asset has risen sharply in value, and the night to Sunday has now long since reached the $13,000 mark again. The last time this happened was in July 2019, if you follow the CoinMarketCap data. At that time, the price was only held for a short period of time, only to plunge again afterward.
However, in the crisis year 2020, Bitcoin’s curve looks a little different from in previous years. 2018 still showed the offshoots of the crypto-hypes that spilled over the globe from fall 2017, and in 2019 BTC oscillated between $4,000 and $13,000. In 2020, however, the share price (with some corona dents) is naturally pointing steadily upwards.
The market capitalization of crypto assets, in general, is also exciting: it is now almost 400 billion dollars — the last time this was done was in May 2018. Although it can be said that some new assets such as Chainlink (LINK) and Polkadot (DOT) have enriched the market, in reality, they are just drops in the ocean with market caps of 3, 4, 5 billion dollars. The crypto market, which is still dominated by Bitcoin — market dominance is increasing again and is now 61 percent.
There are, of course, many factors that contribute to growth, and there is a good deal of debate about what drives the BTC price and what does not. Here are some thoughts on this:
Institutional investors
Whether the Vienna Stock Exchange, Square, PayPal, MicroStrategy, or Raiffeisen Bank International (RBI) — large companies are pushing into the crypto market in different ways. Because they sense that their customers (from professional traders to retail investors) want to buy, hold and trade cryptos sooner rather than later.
Millennial Trader
That leads us straight to the second point. Millennials (aka “Gen Y,” born in the early 1980s to the late 1990s and therefore currently between 25 and 40 years old) have reached the age where people can think about how to invest their money. With highly volatile stock markets and savings accounts that cost more than they yield, the Corona crisis has made investments of all kinds attractive — and a millennium portfolio includes Bitcoin, Ethereum, and Co. Neo brokers and neobanks like Revolut, Robinhood, or Bitpanda take this into account.
The US elections
Better before the 3rd November invest than afterward, many think. The uncertain outcome of the US elections, which can also impact stock and crypto prices, is one reason why prices are shooting up before the big event.
Corona crisis
The COVID 19 pandemic is coming to a head again worldwide, especially in the USA and Europe. Even though BTC suffered massive losses during the lockdowns, it was evident that the asset recovered quickly and often grew in step with the stock market indices. S&P500, NASDAQ, and Co are still pointing upwards, which may impact crypto buyers. How long this will continue is another question.
Tether
One should never forget the controversial Stablecoin Tether (USDT), which some plaintiffs suspected to have been used in the 2017 Pump. This year, the tether’s market cap has increased from about $4 billion to more than $16 billion, showing how strong the demand is. Especially popular is the Stablecoin, allegedly covered by US-Dolar, as a “Safe Haven” for traders to quickly switch to other cryptos and save the detour via Fiat.
As always, when things are looking up, observers take the floor and fantasize that BTC could rise to 20,000 or even 500,000 dollars. It is also remarkable what the Global Markets Strategy department of JP Morgan, one of the USA’s largest banks, has recently had to say about crypto-currencies. In 2017, JPMorgan CEO Jamie Dimon said that Bitcoin was a fraud, now it sounds like it:
“The potential long-term upside for bitcoin is considerable if it competes more intensely with gold as an ‘alternative’ currency we believe, given that Millenials would become over time a more important component of investors’ universe.
An alternative to gold — if one of the world’s largest banks, which a few years ago still positioned itself as a major bitcoin skeptic, even raises the possibility that BTC could become something similar to the precious metal for Millenials, then that speaks volumes.
Now, as always, it remains exciting to see how the course will develop further and, above all, what it will look like before and after November 3, 2020.
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