Bitcoin’s current bullish price action has been a long time coming, and after exactly three years of wait, a new era for the bellwether cryptocurrency has begun. Not only has the $20,000 psychological anchor point been breached, the coin continued to surge beyond $22,000 and then $23,000, all in the span of 24 hours. The new highest price point to beat is $23,642, according to data from CoinMarketCap, although it is currently trading only slightly above $22,600 at the time of writing.
It is indeed a ‘Santa’ rally, a moniker some members of the community have utilized to describe the precipitous growth of Bitcoin in the days leading up to Christmas. Bitcoin has officially grown 370% since its lowest point experienced this year during the Black Thursday sell-offs, and less than a year later, Bitcoin is back and better than ever as the traders in the market experienced a FOMO moment, which likely gave it a boost to go over the edge of $23,000.
Unfortunately, with the influx of demand as investors flooded the market, average BTC transaction fees also saw a substantive upward spike from $2.71 to $11.90, increasing approximately four-fold in a day, according to Bitinfocharts.com.
As mentioned previously, the strong upward momentum of 2020 is different from that of 2017’s, as this year’s incredible price rally comes from a more mature Bitcoin and crypto market. We are looking at a stronghold of institutional heavyweights aside from retail investors, many of which are venturing into crypto for the first time from the traditional finance sector, lending even greater credibility and strength to Bitcoin.
Aside from investments from Mode Global, Grayscale Investments, MicroStrategy, MassMutual and others, even private banks in Italy are jumping on the crypto bandwagon. According to Forbes, Banca Generali recently acquired a $14 million stake in a fintech firm which focuses on crypto, and it is news like this that will spur on the ripple effect for crypto adoption in the future.
There is a remarkable and salient shift in attitude towards Bitcoin. It may have been viewed as a solely speculative, volatile and high-risk investment before where quick pumps and dumps were frequent, investors are not buying Bitcoin to use as a “medium of exchange”, according to Bloomberg. Instead, Bitcoin’s status as a hedge against inflation and wealth-preserving asset is quickly becoming known by many.
In fact, while Bitcoin has been compared against the gold standard, experts are now positing that Bitcoin may even overtake gold in the world of investment assets.
Additionally, industry fundamentals present a solid case for Bitcoin. The US Federal Reserves (Fed) will be meeting these two days to discuss the possibility of another trillion-dollar stimulus bill, and flooding the US economy with more green bills is certain to have an impact on investments, as investors wait with bated breath to react to any upcoming changes. With seemingly endless US bills being printed, the need for an alternative to preserving wealth will be considered.
It is always prudent for new investors especially to be cautious when entering the Bitcoin market, even if the orange coin is experiencing a bull run at the moment. Wild price fluctuations are a feature of Bitcoin, and if careless, traders could stand to lose significantly. It may not be wise to rush head first into the market while the Bitcoin rush is still at its peak.
Price analysts are predicting a significant pullback next week as well right before Christmas, as the $21,000 to $23,000 range may prove to be too tempting for investors to not sell off their Bitcoin in a frenzy.
