How did the cryptocurrency market get to this point?
The cryptocurrency market is surging in popularity with Bitcoin and Ethereum picking up pace. Though Bitcoin is now trading at the value of US$39,766. 2021 was the year when Bitcoin hit its peak of US$60,000. A year before, it was trading below US$10,000. So, what was the reason for this surge in 2021?
Firstly, it’s the acceptance of cryptocurrency. Cryptocurrencies have demonstrated their potential and convinced the general public that they are here to stay. Despite the volatility the cryptocurrency market always had, Bitcoin showed no signs of weakening. When launched in 2009, early adopters of cryptocurrency reaped the rewards, which assured the public and motivated them to do the same.
Secondly, businesses and organizations started showing their support for cryptocurrencies. Coinbase, one of the popular crypto exchanges introduced its initial IPO (initial public offering), trading publicly. The company reported a massive growth revenue, which gained the confidence of investors. Companies like Visa and PayPal started offering cryptocurrency services and tech giant Nvidia recently announced to design a special chip that has expertise in cryptocurrency mining. Tech celebrities like Elon Musk also vocally support cryptocurrencies.
Thirdly, Bitcoin alternative or altcoins supported the popularity of cryptocurrency. As Bitcoin soared, its price became too expensive for the common public. Cryptocurrencies like Ethereum, Litecoin, and Dogecoin (amongst many others) showed their potential and attracted investors with lucrative prices.
Lastly, the COVID-19 pandemic had a major impact on how we use technology. As people were indoors, paying digitally became a norm and digital technology thrived, including cryptocurrency. Thanks to social media, the FOMO culture boosted cryptocurrencies. Bitcoin, Ethereum, and Dogecoin started making headlines highlighting the gains investors made. This pushed millions of amateur investors to give cryptocurrencies a shot.
What’s happening now? Along with the all-time highs, the cryptocurrency market also witnessed several dips, some because of China’s crypto ban and some because of organizations dropping the ball on cryptocurrencies. Market volatility is a harsh reality of cryptocurrencies, but despite the crashes, the cryptocurrency market is not stabilizing. Bitcoin fell from US$60,000 to US$30,000 and is now reaching the US$40,000 mark again. This growth is promoting bull markets for other altcoins and crypto critics, who thought the time of Bitcoin is over, might be proved wrong shortly. Nonetheless, countries are forming regulations to support the hype behind cryptocurrencies in their own ways to promote secure, digital payment technology.