Reasons for the price increase of Bitcoin
The price of Bitcoin develops in parallel with demand, similar to stocks. This means that the price will steigt if many people want to buy the Bitcoin. Unlike stocks, however, the demand for cryptocurrencies is completely decoupled from economic indicators, such as a company's profit.
The current phase of Bitcoin with new highs every week, experts associate with the election of Donald Trump, who is considered a proponent of the technology.
These could be the main reasons for the recent price increase:
- Trump promised during the election campaign that he would not regulate the crypto market, unlike the EU, for example
- He also plans to build a national Bitcoin reserve through the US Federal Reserve, similar to the gold reserve
- In addition, the crypto-critical head of the US Securities and Exchange Commission (SEC), Gary Gensler, quit his job after Trump's election
However, even experts do not seem to agree on what a possible high could be for Bitcoin or whether there could even be a risk of a sharp decline in the foreseeable future. Due to the seemingly extremely divergent opinions, an investment in Bitcoin has seemed more like a game of chance since the beginning.
The argument of the Bitcoin supporters could be: So far, the Bitcoin has repeatedly reached a new high price, even after a sharp decline. So is the investment a safe bet?
Cryptocurrencies are not an established means of payment
Every Bitcoin transaction can be traced because all processes are stored on the blockchain - a kind of logbook. Therefore, there is a high level of transparency about how many transactions are made with Bitcoin.IGT.
Meanwhile would Billions of Bitcoin transactions are processed every month. However, this does not appear to be about paying for goods or services, but rather primarily about exchanging Bitcoin for money.
The transaction volume of Bitcoin has increased significantly from year to year. © Statista
The Bitcoin is considered an alternative to conventional money, but seems to be practically not used as such. According to statistics, cryptocurrencies are only used in around 0.2% of e-commerce transactions [Page on English].
Is the blockchain overloaded and offers no security guarantee?
While Bitcoin proponents repeatedly cite the decentralization and associated security of blockchain technology as an argument for the increase in value of Bitcoin, the reality seems to be different.
The blockchain becomes longer with each transaction and uses more energy. As a result, sending and receiving virtual coins can now not only take up to several days, but it is also becoming increasingly expensive and environmentally harmful.
In addition, the virtual wallets of Bitcoin owners can be a popular target for hacker attacks. It has also happened in the past that cryptocurrencies in custody have been embezzled by operators of so-called crypto exchanges.
However, every Bitcoin investor is also free to store their cryptocurrencies themselves - e.g. On a USB stick. Due to loss of the physical storage medium or other carelessness, Bitcoin can also simply be lost. Already in 2021 around 3.7 million Bitcoin were classified as lost.
Gamblers get their money's worth with Bitcoin.
Whether buying Bitcoin is gambling or investing cannot be answered conclusively. At least, unlike in the casino, there is no bank that automatically wins, even if the transaction fees charged by crypto exchanges could definitely be seen as a kind of house edge.
Anyone who wants to invest in Bitcoin should keep in mind that it is a highly volatile investment. The prices fluctuate very strongly, so many investors rely on a short holding period in order to benefit from short-term price differences.
However, there are also people who hope that Bitcoin will reach new highs in the long term. So far, chart history has shown that the cryptocurrency has managed to do this time and time again.
However, past price developments are never a sure indicator of the future. It will be interesting to see whether Bitcoin will continue to break new records and how its practical suitability will develop.
Similar posts
Gambling Bukmacherzy.com is restarting and revealing the balance of its betting tips Gambling online scratch cards in check: Why NZ$100 is enough here and NZ$300 is allowed elsewhere Gambling gambling update: Free spins at JackpotPiraten, New Year's Eve lotteries & ghost castle at SlotMagie Gambling Gambling Weekly Review: Halloween Slots, Betway Comes to New Zealand & Scandal in Online Poker
- Online casinos
- News
- Miscellaneous
- Is Bitcoin An Investment Or Gambling