This year, Bitcoin is on a tear like we haven’t seen in a long time. This week, the cryptocurrency just hit the $17,000 mark and is still climbing. These numbers are very exciting in the world of cryptocurrency as we haven’t seen any like them since 2017. As of this morning, the price of Bitcoin went up about 5% to trade at $17,849, which, according to CoinDesk, is the highest Bitcoin has gotten since Jan. 7, 2018. Since the beginning of the year, we have seen Bitcoin’s value rise by about 140%. The meteoric rise of Bitcoin and other cryptos this year can be attributed to a couple of factors.

Factors affecting Bitcoin prices

  • Covid-19

Although covid-19 has done a number on multiple markets all over the world, it has been good for certain industries, more so in the technology space. As more and more communities worldwide continue adopting cashless payments, Bitcoin has been slowly but surely catching on. Additionally, there have been several stimulus packages from the government to bolster the industry. Interests by international big league investors such as Stanley Druckenmiller and Paul Tudor Jones has also given the markets a lot of confidence about the future.

  • Political events

Although the year has been riddled with a global pandemic, many countries went to the ballot this year. One of the biggest political showdowns happened in the United States. Because of the uncertainty brought about by the shift in the political climate, many fiat currencies tend to take a hit. This has been the exact opposite of what happens with crypto. Additionally, protests and political unrest in several parts of the world have seen an uptick in Bitcoin’s use as a way to remain secure and anonymous. Because of such strong performances across the board, Bitcoin value is headed to $18,000, which will make a nice profit for those who bought low.

  • Bitcoin and finances

The huge gap that existed between cryptocurrencies and fiats has dramatically closed in recent months. A few years back, most financial institutions ignored Bitcoin and other cryptocurrencies as it was just a bubble and fearing its disruptive power in a 124 trillion dollar industry. However, over time, it has been discovered that the two can indeed complement each other and each profit significantly. For instance, applying blockchain technology in finance has proved to be quite lucrative as decentralized finance, and its myriad of applications are just being discovered. Traditional financial services companies such as PayPal have also seen how lucrative Bitcoin is and have decided to include it as one of its offerings.

As the value of Bitcoin continues to rise, investors in the currency continue to reap huge rewards. Jerome Powell, the chairman of the Federal Reserve, recently encouraged digital currencies as proper avenues for cross-border currency exchange, which could have a big difference in how regular banks and financial institutions deal with foreign reserves.

Historically, high surges have often been followed by sharp corrections in the market. In our case, since the price is headed upwards, investors and traders are warning that the crypto currency’s volatility could be back, which can cause losses in the millions. Although Bitcoin has been one of the less volatile cryptocurrencies out there, the spike in value might very well cause a sharp rise in people and institutions looking to capitalize on the opportunity. If many people and institutions decide to sell, then the currency floods the market, which consequently makes the price dive.

As political uncertainty continues to hover above the country, many investors turn to assets that retain value long term. In this case, it’s more likely that Bitcoin’s value will continue rising even to surpass the $20,000 mark this year. Although the future for Bitcoin is quite uncertain, pundits and industry professionals continue having faith in the currency. And this has captured every serious investor’s attention out there. As of writing, the digital currency has already reached the $18,000 mark. With the Bitcoin price surge, it continues to be the most dominant cryptocurrency for the past few weeks.