Many people think that Bitcoin has risen to a near-historical high, that is, around 19,000 in 2017, and there is a lot of upward pressure.
Bitcoin has come back recently?
On Wednesday (November 18), Bitcoin briefly soared above $18,000, a 154% surge during the year. In the past ten days, the price of the currency has been surging, breaking through the three integer barriers of 15,000 US dollars, 16,000 US dollars and 17,000 US dollars one after another. As a result, Bitcoin has become the best-performing asset class this year, so why did Bitcoin rise, and is there room for it to rise in the future? Can it break the all-time high?
From the comparison chart of the price trend of Bitcoin and gold, it can be seen that since Bitcoin touched 10,000 U.S. dollars in September, it began to develop steadily. It has risen by more than 60%.
Many analysts believe that the U.S. presidential election caused Bitcoin to rise, but I think the reason is not objective enough. Uncertainty about the U.S. election will lead to more funds pouring into safe-haven assets. As shown in the gold trend chart above, gold rose sharply during the U.S. election in early November, especially at the critical moment of the U.S. election. Gold rose even more sharply, but after the U.S. election was no longer stalemate, the price of gold plummeted to $1,860 an ounce .
Bitcoin, like gold, is a safe-haven asset. If Bitcoin’s surge this time is due to the US election, then the trend of Bitcoin should be the same as that of gold. The US election is irrelevant.
So, what is the reason for Bitcoin's surge? In summary, there are five reasons:
First, the DeFi (Decentralized Finance) craze has receded, and funds have returned to mainstream currencies. From May to October, DeFi is a craze for digital currencies, and most of the funds are transferred to DeFi to pursue DeFi tokens. Recently, DeFi has started to go cold. The DeFi coins that were hyped in the early stage fell from their high point, and fell by about half on average. At present, there is no possibility of rebounding to the previous high point. At this time, funds will begin to withdraw to mainstream currencies such as Bitcoin, which will naturally increase the demand for Bitcoin.
Second, Paypal (US online payment service provider) caused a sharp increase in the personal transaction volume of Bitcoin. PayPal recently entered the digital currency exchange business, which can be described as far-reaching. Its transaction volume grew from nearly $500,000 in October to $25 million as of November 13. From its sharp increase in transaction volume, Paypal's digital currency transaction business is very popular. Because paypal is not only a big-name company, but also a very formal listed company in the United States, it has attracted a group of conservative potential users, because these people are unwilling to trade on unregulated digital currency exchanges. Paypal's service satisfies the concerns of many potential customers in the United States, so the transaction volume has been rising.
Third, institutions are constantly pouring in to hold Bitcoin. Institutional interest in Bitcoin was very strong throughout November, which contributed to the sharp rise of Bitcoin. Several well-known companies and high-net-worth individuals are investing in Bitcoin. In the Chicago Mercantile Futures Trading Market for institutional clients, 102 large institutions hold bitcoin futures trading positions, an average increase of 126% over last year, indicating that institutions are bullish on bitcoin.
Fourth, there has been an abnormality in a digital currency exchange recently. The founder of an exchange was taken away by the police to assist in the investigation, which has resulted in the entire exchange being unable to withdraw coins. A large foreign exchange has also encountered regulatory problems in the United States. The negative news of these digital currency exchanges will make everyone worry about the compliance of the exchanges. In this panic, large funds and institutions will sell the tokens issued by these exchanges and replace them with decentralized ones. bitcoin. This part of the funds flowed back to Bitcoin in order to avoid risks, which boosted the price of Bitcoin.
The fifth and most important reason is the rapid issuance of USDT (digital currency stable currency). The circulation of USDT on the entire network has reached an astonishing 17 billion US dollars. You must know that the circulation of USDT at the beginning of this year was only 4 billion US dollars, which means that it has increased by 4 times in just 11 months. It is said that USDT is the U.S. dollar in the digital currency world, so let’s imagine that if the Federal Reserve suddenly increases the number of U.S. dollars by 4 times, then the prices of all commodities in the world will soar, whether it is oil, gold, houses, eggs or mineral water, because U.S. dollars are An anchor price benchmark for all commodities. The increase of USDT to 4 times may be partly due to the increase in demand, but is there no water in it? Is it true that everyone's demand for digital currency has increased by 4 times in just 11 months? This is clearly out of touch with reality. These super issued USDT will eventually boost the prices of all currencies.
In short, under the interaction of the above five reasons, it is impossible for Bitcoin not to rise. What is the future trend of Bitcoin? The author thinks that as long as USDT continues to be issued, the price of Bitcoin will continue to rise. Many people think that Bitcoin has risen to a near-historical high, that is, around 19,000 in 2017, and there is a lot of upward pressure. However, in 2019, the USDT circulation was less than 1 billion, and now it is 17 billion, a difference of 17 times. If USDT continues to be issued crazily and the price of Bitcoin breaks through the historical high, it is only a matter of time.
