There are a lot of factors that increase the price, and most of them are played.
Three things in particular push it up high, and nothing links it to half.
Bitcoin (Cryptography: BTC) Prices have risen nearly 40% over the past six months and could soon rise even further. This trend is not merely a random fluctuation in the price of an asset.
There are at least three driving the coin surge. Everything is likely to continue, so let’s take a look at each one.
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Many investors prefer to think that the value of an asset is determined by its basic attributes rather than the whimsical feelings of our fellow investors. It’s a great idea and supports all financial models. But it’s a fake, especially when it comes to famous assets like Bitcoin.
Reflectivity is a financial theory that explains how the price of an asset and its fundamentals affect each other in the feedback loop. Investor beliefs move prices, price movements change the basis, altered basics validate or undermine the original beliefs, and often amplify the cycles. This loop is most durable when the basic investment attributes are solid. Otherwise, the process is a little too close to the Ponzi scheme that blocks investors rather than attracting investors.
Bitcoin, like mostly all cryptos, does not have the basics for use in traditional evaluation models, so it is exemplified by its reflexivity. Instead, beliefs raise their prices, prices attract followers, they embrace even higher prices, hope, and the self-realization cycle continues. So, one of the biggest reasons why Bitcoin is currently surged is that it has been soaring before. And one of the biggest reasons why it continues to skyrocket in the short term is that it is currently surged.
Note that reflectivity also works inversely. A proper sequence of bad economic catalysts or new regulations could send Bitcoin price craters, and at some point, on a long enough timeline. That doesn’t undermine Coin’s long-term investment paper, but it’s a reason to buy carefully if prices are rising rapidly.
Currently, the heyday of global government Bitcoin policy.
The Trump administration recently issued an executive order calling for the establishment of a strategic Bitcoin Reserve. It hasn’t been implemented yet and is not connected to the operational dynamics to do so, but if implemented as expected, it is mandatory to hold coins that can be obtained through asset confiscation, making the US a major holder of Bitcoin. And that will have a direct long-term impact on the price of the coin. Because it means that more and more supply will be maintained from the market indefinitely, or at least until the new administration changes its policy.
The story continues
Other countries such as the Czech Republic, Russia, and Japan are studying, discussing and considering the implementation of similar policies. Even if there’s no one in the next few years, at least thinking about this issue will ensure that others will continue and in the end we will do that.
Major players like China have yet to announce changes to their plans, but are openly debating what the new policy will look like. Therefore, many investors are beginning to interpret that by purchasing more Bitcoin now, it could (although not guaranteed) future policy changes as a powerful catalyst worthy of frontrunning. It is harder to imagine China’s anti-cryptic government today than it was a few years ago.
In short, the long winter for governments seeking to ban Bitcoin and other cryptocurrencies is over. It attracts many institutional investors and other large buyers. They are keen to invest in assets that see the biggest single risk die down and are persuading them to buy small investors for the same reasons.
On April 28, the Bitcoin Treasury strategy announced it had purchased $1.4 billion in coins the previous week, bringing its total holdings to a heart-warming total of over $52 billion. This is not the first time I’ve bought a Gargantuan, and not the last time. And it’s not the only whales that are accumulating coins right now.
In particular, companies are enthusiastically buying Bitcoin to hold it on their balance sheet. Mega Cup businesses like Tesla and other well-known players are now holders. It is true that purchases made by large capitalists can move the price of Bitcoin on a certain day, but the bigger meaning is that they prefer to hold their coins and then borrow Fiat currency, using value as collateral rather than selling them. Therefore, there is not much supply of coins to future buyers.
And it will raise prices in the future, like it is now.
Consider this before purchasing inventory with Bitcoin.
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Alex Carchidi has a Bitcoin position. Motley Fool has a position and recommends Bitcoin. Motley Fools have a disclosure policy.
Three reasons why Bitcoin is surged is originally published by The Motley Fool
