On Wednesday, bitcoin reached the price of $54,873.02, which is about 7.6 % higher than the previous day’s one. It is a great achievement for the cryptocurrency as it is maintaining its position as the largest cryptocurrency in the world.
Bitcoin was having a hard time and this sudden spike has brought it back on track. The ups and downs in the various cryptocurrencies are due to their nature of uncertainty. The recent ban on all crypto currencies in China, both in national and foreign usage, had shaken the foundation of the crypto market. The investors were left in a position of speculation as to whether any other country would follow in China’s footsteps. Irrespective of all of the ambiguities, the currency has experienced a hike this week. The spike has several reasons behind it.
On Tuesday, a hearing was held in the House Financial Services Committee in which the chairman of the Securities and Exchange Commission gave his statement on the matter of cryptocurrency. Gary Gensler said that he had no plans of banning crypto currencies and that the decision would lie with Congress if they wanted to implement any strategy like that.
Another major reason behind this hike in the value of bitcoin may be the present conditions in the US. There is a high chance that inflation is going to hit all the parts of the world and it is being experienced in many countries right now as well. Rising crude oil prices are a major factor that is hitting all the countries across the globe.
Jerome Powell, the Fed chair, also indicated that they didn’t have any such plans either. This was quite a relief for the investors as they were secured from the risk of big losses. These statements, among other things, are the factors behind the sudden spike in the value of bitcoin.
Interest rates that are negative or zero in many countries are now assumed to rise shortly. This was one major indication by Fed Chair Jerome Powell when he signaled the beginning of asset tapering soon. Europe has been facing some problems due to low interest rates and will only lift them once the various countries see better economic conditions.
When the US Secretary of the Treasury, Janet Yellen, said that the US was going to exhaust all the emergency funds by the 18th of October, the whole world is going into a state of economic crisis. This triggered upwards pressure on the price of cryptocurrencies. The dollar would be another good option when it comes to investing and the forex market, as its seen as a safe haven in the time of economic turbulence. Not just bitcoin, other cryptocurrencies are also seeing a rise in their prices since news broke about the US treasury.
The recent blackout of Facebook and Instagram is also said to be having a role to play in the increment of bitcoin prices. The centralization of the technologies led to a blackout all across the globe for many hours. The framework that is being used in multiple financial and technological systems needs a change. In the favor of bitcoin, the technology and framework of some cryptocurrencies such as Ethereum are capable of making beneficial changes to the financial market.
In the previous months, Bitcoin has been gaining popularity at a steady rate. El Salvador adopted the cryptocurrency as a legal tender and became the first country to recognize bitcoin as a currency. The country even offered $30 worth of bitcoin to all its citizens as an initiative to popularize the idea. After the spike, many citizens of the country are buying bitcoin on a large scale, whereas the withdrawal rate is quite low.
Cryptocurrencies do revolve around ambiguity and uncertainty, but if given the right approach and effort, they can be profitable as well. For now, the progress of bitcoin or any other cryptocurrency depends on how reliable they are, and the benefits they can provide as compared to central bank currencies of the world.