Bitcoin rallied past $30000 on Saturday smashing previous records. As many investors and traders feel that Bitcoin is on its way to becoming a mainstream payment method across the world in the near future.
Bitcoin Rallies Above $30000 For First Time
On Saturday, Bitcoin reached its latest high of $33,099 and ended the day around $32883. In 2020, the crypto currency advanced more than 300%. The big surprise is that the final 50% of the rally came in the last two weeks. It recently crossed $20000 and reaching a level of $33000 has surprised many analysts in the market.
Many people used Bitcoin and other crypto currencies as a hedge against other commodities in 2020 due to the economic slowdown across the country. Analysts felt that Bitcoin was a good option to hedge against inflation. Apart from that, traders also felt that there was a potential for a quick gain in such currencies. This led to the huge spike in recent months.
According to investors, the limited supply of Bitcoins make it the best alternative for other currencies that usually get degraded due to stimulus packages. As the governments do not have many options other than to print money in times of emergency, the fiat currencies often lose their value over a period of time. The high level of inflation often reduces the purchasing power of fiat currencies in the long run. However, such risks are not there when it comes to Bitcoins.
Many crypto currency enthusiasts felt that Bitcoin was on par with gold when it came to hedging against economic slowdown. For this reason, many investors took specific interest in this crypto currency in 2020 as the entire nation was facing a severe economic crisis due to the covid 19 situation. Many businesses were forced to shut down for a long time during the lockdown situation.
Some market experts are of the opinion that Bitcoin is likely to cross $100,000 in the next few years. Even though this is an ambitious target, many people feel that this is easily possible if the governments do not interfere with the blockchain based currencies in future.
People who support crypto currencies feel that they have lost faith in the fiat currencies due to the actions of the governments in recent years. The coronavirus pandemic has aggravated the situation further as several governments and central banks across the world are forced to offer stimulus packages to help millions of people who have lost jobs and livelihood during the pandemic.
The Federal Reserve also kept interest rates near zero in order to support the economy. Apart from that, they also said that the interest rates are likely to remain zero for a very long time till the economy recovers from the current situation. The US administration has announced a huge stimulus package amounting to several billion dollars as public aid to support Americans who have lost jobs during the pandemic.
Market analysts are of the opinion that crypto currencies also have some risks associated with them as they can be regulated by the governments in future. As of now, the Trump administration is not in favor of promoting such currencies into the mainstream markets and even Biden shares a similar opinion when it comes to Bitcoins.
Even across the world, such currencies face regulatory issues as the governments often like to have some control over the currencies in the market. As Bitcoin is not regulated by any central body that has international recognition, it may not get widespread acceptance easily in several conservative countries. Given this situation, investors should weigh in the risks and rewards associated with crypto currencies before making investments in such platforms.