Bitcoin is the oldest cryptocurrency in the world and also stands as the most valuable. 2020 has been a fantastic year for investors in BTC (Bitcoin) and other favorable altcoins, which have seen a huge spike in value. Last week, Bitcoin surpassed the $18,000 mark, which is the highest it has ever gotten since December 2017. Starting the year at about $9,700, Bitcoin has gained more than 150% value, which as an asset class is quite attractive to investors.
The great year hasn’t been for Bitcoin alone. Other popular altcoins such as ETH (Ethereum), which started the year at about $150, is now worth north of $500, which is also very impressive. One of the biggest attractions investors have when it comes to digital assets is their ability to make someone some good money because their prices are always in flux. While some people think that what we are seeing is more of what happened in 2017, other experts say that the Crypto Bull Run is just about to get started.
What is different?
When critically looking at the crypto industry over the last couple of years, we can see a lot of growth and maturity. Back in 2017, the industry was quite young and hadn’t gotten a proper footing. Back then, prices were dictated by retail speculation, which just added to the cryptocurrency volatility. Today, the industry isn’t just moved by whims in the retail sector. Institutional backers and billionaires have also joined in on the fun, not only bolstering their value but also giving Bitcoin and other valuable altcoins a stabilizing effect.
Unlike individual investors in Bitcoin and other cryptos, institutional backers are very serious about the value for money they are getting and, as such, go in heavy on major investments. These days, major financial advisors are even advising their clients to dedicate a portion of their assets to crypto since it’s quite profitable. Major players in the financial sector, such as PayPal, have also fully embraced Bitcoin. This comes after the company officially let 200 million-plus active PayPal user base to buy, sell, and hold several virtual currencies. Many pundits have said that PayPal’s move into crypto will have a more stabilizing effect on the prices of cryptocurrencies and make them spike up a bit. Additionally, hedge fund managers have also gotten onto the gravy train. Billionaire hedge fund managers Stanley Druckenmiller and Paul Tudor Jones have also poured hundreds of millions of dollars into purchasing crypto assets, which should be an apt indicator that Wall Street loves crypto.
Where does it go from here?
2020 has been a challenge for many countries all over the world. Economies have taken a bad hit, but a new asset class has quite a bright future. Cryptocurrency enthusiasts have likened Bitcoin to an asset such as gold, which is considered safe havens and is a favorite for investors in financial uncertainty. Several investors say that the covid-19 related stimulus packages have made sovereign currencies such as the U.S. dollar less attractive.
Since supply is also a huge aspect of why a product is valued as it is, Bitcoin’s supply is continually dwindling. Earlier in the year, the Bitcoin blockchain went through some updates, which have come to be called “halving.” This is an event that happens automatically to adjust the difficulty of mining new Bitcoin as their numbers continue to dwindle. However, although all indications show that the Crypto Bull Run is just getting started, it’s important to always have a hedge in place or not to invest using the money you can’t afford to lose. After the Bitcoin craze in December 2017, the cryptocurrency value plummeted to under $3,100, costing people billions of dollars in the process. This is why financial advisors are advising that people put aside only a small portion of their portfolio into this asset class to enjoy the rewards without feeling too much of the pinch should things go sideways.