During the crisis caused by the pandemic, the cryptocurrency received a new wave of interest, which immediately led to several factors. First of all - May halving. In May, the miners' reward for mining BTC was cut in half, information about which was actively searched by Google users. As a result of halving, the rate of coin entry into the market decreased. If the demand for digital gold persists, this should lead to an increase in its value, writes RBC Crypto.
Bitcoin has also become a defensive asset. Bloomberg analysts came to this conclusion in April, explaining that due to increased interest in BTC futures and a decrease in volatility, the coin is losing its speculative component. In addition to this, large investors began to invest in BTC. For example, in May, billionaire and founder of the hedge fund Tudor Investment Paul Tudor Jones invested $ 50 million in the first cryptocurrency, and in August the Canadian restaurant chain Tahini's announced the transfer of all its cash reserves to BTC.
The most recent example of growing trust inthe cryptocurrency was the MicroStrategy company, which produces analytical software. On September 15, its head Michael Sailor announced on his Twitter account that the firm increased its BTC investment by $ 175 million, to $ 425 million. Immediately after that, MicroStrategy's stock quotes rose 23% to $ 176, although by the current moment they have dropped to $ 163 ...
There are two reasons why bitcoin began to strengthen its status as a defensive asset:
- First - restoration of its course after fluctuationsmarkets caused by the pandemic. In March, the bitcoin price fell from $ 10,000 to $ 3800. Within two days, the coin fell in price by more than 50%. Then the price began to rise, in May it reached pre-crisis values, and in August it set a new annual maximum at levels above $ 12,000.
- Second - dollar problems. The US government has adopted a quantitative easing policy to combat the economic consequences of the coronavirus pandemic. The US Federal Reserve Service (FRS) began to increase the country's national debt and the number of dollars in circulation.
Such measures lead to currency depreciation. This is proved by the DXY index, which shows the strength of the dollar against a basket of other national currencies. In March, during the fall in all markets, this indicator rose rapidly from 95 to 102 points. This reaction was caused by the fact that investors around the world were buying USD as a defensive asset. But then the DXY value began to decline and by the current moment dropped below 93 points.
As the dollar depreciated, bitcoin rose in price,analyst Omkar Godbowl drew attention to this in August. He suggested that an inverse correlation was formed between BTC and USD: investors began to look for alternative defensive assets in order to save capital from the depreciation of the American currency.
The gradual weakening of the dollar and halving isonly two factors that speak in favor of the rise in price of bitcoin. There are others. Crypto industry experts told what reasons are there to invest in cryptocurrency right now and how likely a decline in its rate is.
"The Most Important Reason to Buy"
Senior Analyst Bestchange Nikita Zuborev.
There is a point in buying bitcoin now if youready, firstly, to risk the amount invested, and secondly, not to touch the investment for more than a year. On the basis of a combination of factors, in the perspective of the year, we can count on updating the historical maximum of the coin price of $ 20,000, set in December 2017.
The most important reason is endless emissionUS dollar, which worsened during the pandemic. This increases inflation in the world's main currency. Against this background, financial instruments with limited emission look more attractive - bitcoin and gold win in this indicator.
The positive factor is that the hashratebitcoin network continues to update highs. This may mean that miners are confident in the long-term strengthening of the cryptocurrency rate. For example, next weekend the next adjustment of mining difficulty is expected by 10-11%, and the computing power only continues to grow.
The reason for the local take-off in popularity and growththe volume of the crypto market is a hype around the decentralized finance (DeFi) market. Traditionally, it has not been without media that stir up interest. But do not forget the story: in the event of a sharp loss of interest in DeFi, the market situation may turn sharply, and technical analysis, even without this, allows a fall to the level of $ 8,800. For comparison, ICOs could not hold out in the phase of active growth even for a year.
Neutral negative factor in the short termLooking ahead, futures trading volumes on the Chicago Mercantile Exchange (CME) have recently been breaking records. This, in turn, strongly constrains the growth of prices. On the other hand, such a restrictive tool increases trust from large investors, which has a positive effect on the future of all cryptocurrencies.
"Invest right now and buy on rollbacks"
Dmitry Lavrov, trader and founder of Tradeunity.
It makes sense to buy cryptocurrency today for a number of reasons:
- If you are looking for an asset that can be profitable in the long term, Bitcoin and some of the top altcoins will be on this list.
- The crypto market has not yet exhausted the potential for upward movement, and there is every chance to test all-time highs.
- The crypto market is in an uptrend and ifwe make decisions based on technical analysis, this is a reason to open long positions. If we are talking about fundamental factors, they, at least, do not contradict the upward trend.
- If we are talking about long-term goals, it seems to me that first of all we should take into account the historical highs. These are the levels that will be the main target for investors.
I don’t think we will see any significantdrop in the market. Sideways movement, corrections - all this is a component of the global upward trend. At the moment, there is no reason to change the bullish pattern to anything else. It makes sense to invest right now and buy more when pullbacks from important support levels.
"$ 14,000 per BTC by the end of the year"
Private trader Alexander Boyarintsev.
I think it's worth investing right now. By all measures, we see that, indeed, bitcoin is at the beginning of growth. And the first reason is that institutional investors began to enter the crypto market. Now there are more and more services for custody storage of cryptocurrencies, and professional investors are looking more and more at Bitcoin. One of the fundamental reasons is the fact that BTC has shown gains after the March drop, proving that it is a fully defensive asset.
Another reason to buy is overwhelmingmonetary policy of the central banks of various countries, which, in the future for several years, may well cause a surge in inflation. We see the growth of commodity markets, especially the precious metals market. This indirectly confirms future inflationary risks, so there is no need to wait for a correction.
I am sure that by the end of the year the main cryptocurrencymay well overcome the mark of $ 14,000 and above, and in the next - renew its maximum. Uncertainty is growing in the world, and Bitcoin is the beneficiary of this event. I would also invest in Ethereum, since almost all DeFi projects now use this technology. You can buy an index, which includes various DeFi tokens, so as not to analyze a million projects.
Please note that the material is published for informational purposes only and does not provide investment advice.
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