When the supporters of President Donald Trump barged into the US Capitol to obstruct the certification process of President-Elect Biden, it had a record-breaking effect on Bitcoin Prices. The price of Bitcoin jumped to an all-time high of $37,117.04.
The beginning of 2021 telltales a great year for cryptocurrency, as less than a week into the year, on Wednesday alone bitcoin prices have surged by 25%!
In fact, Crypto News website Coindesk has hailed 2021 as a “Landmark Year for Cryptocurrency”.
So, let’s look into some contributing factors like the uncertainty in US politics which is causing the Bitcoin price rally.
Macro-economic factors: Macro-economic factors like inflation have a negative impact on the price or value of fiat currencies. However, the recent price surge can be attributed to uncertainty than to the tendency of investors to hedge inflation risk. Global macro-economic uncertainties like civil unrest have the potential to devalue fiat currencies. When protestors barged into the US Capitol allegedly killing at least one person. It in effect increased the attractiveness of investing in Bitcoin.
Perception of Bitcoin as digital gold: On Monday, JP Morgan published a note where it has claimed that the price of Bitcoin could soar to $146,000 as it competes with Gold as an “alternative” currency. JP Morgan is not alone in comparing Bitcoin to digital Gold. Managing Partner of SkyBridge Capital Anthony Scaramucci told CNBC that he sees Bitcoin’s store value “replacing Gold.” This narrative is pushing institutional investors to channel their investments into cryptocurrency which is, in turn, is pulling Bitcoin prices.
At the time of this writing, the market value of Bitcoin currently stands at more than $690.121 Billion. The market value is more than that of publicly traded companies like Alibaba and Berkshire Hathaway. It in fact Bitcoin Market value holds a market position next to the world’s top 8 largest companies by market capitalization.
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