Twelve years following its launch by Satoshi Nakamoto, the Bitcoin cryptocurrency has been rising in price to unbelievable heights.
Importantly, the COVID-19 pandemic placed Bitcoin at the center of global institutional and government interests. The cryptocurrency had long been considered a “safe haven” thanks to its fundamental independence from direct central banking interference.
Even as increased government spending was witnessed at the height of the international public health crisis, some money ended up in Bitcoin. The increase in institutional investment drove the Bitcoin trade volumes up – mass purchases from big players meant that the virtual coin became more scarce, thus leading to the hiking of its price.
At this point, the question lingering on every investor’s mind is whether the Bitcoin price will remain put or come crashing down. It is very difficult to accurately predict the crypto’s future, but the current market circumstances point to the possibility of a “loud pop” of the proverbial Bitcoin bubble.
What are the Scenarios?
The issue of price sustainability will be internal to the Bitcoin cryptocurrency. Point to note, it is reported that the mining industry began struggling with the global shortages in chip manufacturing and those of mining machines – experts believe that the problem is bound to prevail as the COVID-19 crisis persists.
Crypto analysts predict that once the manufacturing issues get sorted out eventually, a sudden rise in mining machine manufacturing and competitors will make render the mining process less profitable.
Quite obviously, such an occurrence will lead miners to hold rather than liquidate the cryptocurrency they generate – the action will be pegged on hopes that they will manage to boost the Bitcoin price to agreeable levels, and advance the value of their otherwise reduced profits.
Still, this is not to say that the possibility of a Bitcoin crash will be avoided. A host of pundits have opined that the current rapid rise in Bitcoin’s value is partly influenced by an algorithmic phenomenon where crypto funds follow trends to register inflated prices.
According to a tweet published by Nouriel Roubini, Chief Executive Officer at Roubini Macro Associates and a New York University scholar, tether is being used to manipulate crypto market forces in propping the Bitcoin value up.
The Bitcoin critic goes on to state that almost no merchant recognizes Bitcoin due to its price volatility that culminates in unprecedented markets risks. According to Roubini, the profits made by people looking to make monetary gains from Bitcoin are usually lost even before conversions are made back into fiat currency.
Further, apart from citing the energy cost of Bitcoin mining, the professor asserted that Bitcoin lacks intrinsic fundamental value when compared to other assets like gold and silver. These points place Bitcoin into the category of a manipulated asset whose bubble will burst.
The general sentiment can be drawn from potential implications that would arise from notable institutional investor action that would correct the digital currency’s value. A statement by J.P. Morgan suggested that a major shift in Bitcoin’s value will be witnessed if the massive Grayscale Bitcoin Trust, whose crypto holdings account for 3 percent of all Bitcoin in existence, alters its investment.
It is predicted that if the virtual asset investment firm chooses to cut down on the amount of Bitcoin it purchases on a monthly basis, a figure that currently stands at $1 billion, then the Bitcoin price will certainly drop dramatically.
To conclude, we can all wonder about the events that would arise once the international community will succeed to solve the global COVID-19 pandemic. If that happens, it is easy to imagine that Bitcoin investors will possibly shift their funds elsewhere.
Twelve years following its launch by Satoshi Nakamoto, the Bitcoin cryptocurrency has been rising in price to unbelievable heights.
Importantly, the COVID-19 pandemic placed Bitcoin at the center of global institutional and government interests. The cryptocurrency had long been considered a “safe haven” thanks to its fundamental independence from direct central banking interference.
Even as increased government spending was witnessed at the height of the international public health crisis, some money ended up in Bitcoin. The increase in institutional investment drove the Bitcoin trade volumes up – mass purchases from big players meant that the virtual coin became more scarce, thus leading to the hiking of its price.
At this point, the question lingering on every investor’s mind is whether the Bitcoin price will remain put or come crashing down. It is very difficult to accurately predict the crypto’s future, but the current market circumstances point to the possibility of a “loud pop” of the proverbial Bitcoin bubble.
What are the Scenarios?
The issue of price sustainability will be internal to the Bitcoin cryptocurrency. Point to note, it is reported that the mining industry began struggling with the global shortages in chip manufacturing and those of mining machines – experts believe that the problem is bound to prevail as the COVID-19 crisis persists.
Crypto analysts predict that once the manufacturing issues get sorted out eventually, a sudden rise in mining machine manufacturing and competitors will make render the mining process less profitable.
Quite obviously, such an occurrence will lead miners to hold rather than liquidate the cryptocurrency they generate – the action will be pegged on hopes that they will manage to boost the Bitcoin price to agreeable levels, and advance the value of their otherwise reduced profits.
Still, this is not to say that the possibility of a Bitcoin crash will be avoided. A host of pundits have opined that the current rapid rise in Bitcoin’s value is partly influenced by an algorithmic phenomenon where crypto funds follow trends to register inflated prices.
According to a tweet published by Nouriel Roubini, Chief Executive Officer at Roubini Macro Associates and a New York University scholar, tether is being used to manipulate crypto market forces in propping the Bitcoin value up.
The Bitcoin critic goes on to state that almost no merchant recognizes Bitcoin due to its price volatility that culminates in unprecedented markets risks. According to Roubini, the profits made by people looking to make monetary gains from Bitcoin are usually lost even before conversions are made back into fiat currency.
Further, apart from citing the energy cost of Bitcoin mining, the professor asserted that Bitcoin lacks intrinsic fundamental value when compared to other assets like gold and silver. These points place Bitcoin into the category of a manipulated asset whose bubble will burst.
The general sentiment can be drawn from potential implications that would arise from notable institutional investor action that would correct the digital currency’s value. A statement by J.P. Morgan suggested that a major shift in Bitcoin’s value will be witnessed if the massive Grayscale Bitcoin Trust, whose crypto holdings account for 3 percent of all Bitcoin in existence, alters its investment.
It is predicted that if the virtual asset investment firm chooses to cut down on the amount of Bitcoin it purchases on a monthly basis, a figure that currently stands at $1 billion, then the Bitcoin price will certainly drop dramatically.
To conclude, we can all wonder about the events that would arise once the international community will succeed to solve the global COVID-19 pandemic. If that happens, it is easy to imagine that Bitcoin investors will possibly shift their funds elsewhere.
