Bitcoin has finally surpassed its previous all-time high and set a new record after spending the last three years in a bearish trend
It has taken nearly three years, but Bitcoin has achieved another all-time high. Bitcoin has surpassed its previous all-time high record of $19,783. The leading cryptocurrency recorded a new all-time high of $19,900 yesterday.
By trading at $19,900 per coin, Bitcoin broke the previous all-time high record set in December of 2017. Investors that ventured into the market following the 2017 bull run are finally seeing their investments yield fruit while the newer market entrants would feel validated by their investments in Bitcoin and cryptocurrencies.
Several sceptics diminished Bitcoin’s status as an investment tool, pointing out that it had struggled to replicate its 2017 performance despite having a favourable macro backdrop. However, several factors contributed to the current rally.
The halving event, which took place in May this year, saw numerous investors enter the market. Historically, the halving events are followed by a bull run and this year wasn’t any different. The halving event saw the reward for miners slashed into two, from 12.5 BTC to 6.25 BTC per block.
Despite starting the year strongly, Bitcoin stuttered and lost more than 50% of its value in March in what is now known as the Black Thursday. The coronavirus pandemic hit the financial markets hard during that period, and Bitcoin was similarly affected.
Bitcoin has recovered and is up by over 400% since its decline below the $4,000 mark in March. Another critical factor that played a role in Bitcoin’s rally is the unprecedented spending by central banks worldwide as they tried to cushion the effects of the coronavirus. An increasing number of people began to look at Bitcoin as an investment tool to hedge against potential inflation from the loose monetary policies. People had more money to invest in cryptocurrencies as they received stimulus and other packages from governments.
However, some analysts believe that the primary reason behind the current rally is the entry of institutional investors into the market. Over the past three years, several institutional firms have changed their stance and invested billions of dollars into the cryptocurrency market.
Chief amongst the institutional investments include MicroStrategy’s $425 million Bitcoin investment, Square buying $50 million worth of Bitcoin, PayPal offering cryptocurrency services, and most recently, Guggenheim planning to invest $500 million indirectly into the market.
Some analysts predict a more extended and sustainable rally, implying that Bitcoin’s price could soon cross the $20,000 mark.