Bitcoin’s value has been volatile this week.
The main cryptocurrency experienced a remarkable surge, reaching a peak of $13,785.25 on June 28th before encountering a sudden 12% decline. The price dropped to slightly above $10,500 before rebounding to just under $12,000 as of Friday morning.
In 2018, cryptocurrencies gained massive popularity when Bitcoin hit $20,000 in January, marking the peak market cap of the cryptocurrency market. Subsequently, Bitcoin and other cryptocurrencies experienced a sharp decline, leading to a quieter cryptocurrency landscape in the latter part of 2018. However, the spring of 2019 has witnessed a resurgence of Bitcoin and many other cryptocurrencies, with several potential factors contributing to this revival.
One significant factor is the gradual integration of cryptocurrencies into mainstream finance. Increased interest from major tech and financial services companies has once again brought the spotlight onto cryptocurrencies. Recent developments, such as Facebook’s collaboration with PayPal, Visa, Uber, and others to launch the Libra coin, have further propelled the acceptance of cryptocurrency. Moreover, notable retailers like Nordstrom and Whole Foods have begun accepting various cryptocurrencies.
Another potential driver of Bitcoin’s recent gains is economic uncertainty. Ongoing trade tensions between the US and some key trade partners have led investors to seek refuge in assets perceived as safe havens from the global economic instability. However, a study published in Springer titled “Market Risk & Bitcoin Returns” revealed that cryptocurrencies, including Bitcoin, are subject to similar market risks as other assets. Additionally, Bitcoin’s upcoming halving, which occurs every four years to manage inflation, could increasingly impact its price in the future due to the dwindling supply.
