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Why is Bitcoin price going to rally?

By now you’re likely to have heard about Bitcoin and how it has become one of the most sought-after investments in the market. At the time of writing, BTC prices have been hovering slightly above $19,000 – nearly twice its value since the start of 2020.

Even long-time skeptic of Bitcoin, investment bank J.P. Morgan has been forced to concede that Bitcoin prices could “double or even triple” and take its place as a rival to gold.

So, what has brought about this drastic change in fortunes?

Just several months ago, some were wondering if Bitcoin prices would continue falling. Fast-forward several months, post-halving and Bitcoin is being hailed as a solid investment asset with even institutional investors taking note.

With all of this in mind, we now ask the question – why are Bitcoin prices beginning to rally? Read on to find out more.

  1. An uneventful halving

The creator of Bitcoin; Satoshi Nakamoto, has said on several occasions that Bitcoin is intended to be entirely inflation proof. In order to bring this to fruition, there needs to be a limited supply of Bitcoins on the market.

This ensures that there will never be excess amounts of cash chasing only a limited supply of goods and services. With a supply of 21 million, there is a finite supply of Bitcoins that can be mined. After that, no new Bitcoins will be released into the market.

An event known as the halving occurs once every 4 years or when 210,000 blocks are mined. This process reduces the Bitcoins rewarded for solving transactions by half thus controlling the quantity of Bitcoins in circulation and reducing inflation by half.

In the wake of 2020’s halving, the quantity of new Bitcoins flowing into the market was literally halved thus putting downwards pressure on the supply. With crypto markets remaining stable and supply halved, demand for Bitcoins began to rise. All of which resulted in rising cryptocurrency prices.

  1. Changing public perceptions

In the early days, Bitcoin and other cryptocurrencies were viewed with suspicion due to their unregulated nature and extreme market volatility. Previously dismissed as a trendy investment for the Silicon Valley generation, things began to change drastically in the wake of the 2017 bull run.

As Bitcoin prices went through the roof in 2017, mainstream investors began taking notice of digital assets and their potential. Ethereum for example has found a niche in Singapore thanks to its use in smart contracts.

Meanwhile, blockchain technology has made it possible for large quantities of funds to be transferred quickly and efficiently at a significantly lower cost. This proved to be a game-changer with companies from around the world beginning to accept cryptocurrency payments.

All of this has changed the public’s opinion of cryptocurrency and made investors more receptive towards it. Bitcoin in particular has enjoyed much of the attention as can be seen by 2020’s bull run.

  1. The uncertainty of 2020

A global pandemic that has left entire countries in quarantine and the specter of a massive economic meltdown coupled with widespread unemployment are just some of the reasons why 2020 has been a horrible year for everyone.

Toss in a divisive 2020 U.S Presidential Election and a superpower in crisis and you have everything you need to light up the powder keg.

Throughout all this, investors have been sent scrambling to and fro as they desperately seek to get ahead of the rising tide. Thanks to changing perceptions and an uneventful halving, we’ve seen many referring to Bitcoin as “digital gold” – a title that is rather apt given the situation.

Being unregulated and decentralized, cryptocurrencies such as Bitcoin are relatively unaffected by government policies and geopolitical tension. In fact, some investors even prefer Bitcoin to fiat currencies and stocks – which says a lot about how we’re doing.

All of these facts are just some of the reasons why Bitcoin prices have seen a boost in 2020.  Despite the volatility, it would appear that the outlook for Bitcoins in 2021 is a positive one.

Still, it is always a good time to look at what is the difference between Bitcoin and Ethereum, to try diversifying your portfolio.