Bitcoin is the leading cryptocurrency in the crypto world. Almost every crypto exchange in India has bitcoin for its users to trade and invest in.
This is one of the promising sectors of the economy which witnessed booming despite global pandemic wreaking havoc upon us. Several crypto start-ups came into existence during this period to cater to the demand to buy bitcoin and other alt coins in the market.
Cryptocurrency market capitalisation is actually fueled by bitcoin’s growing name and fame. It is attracting a tremendous number of participants with its full proof blockchain technology.
Last year the price of Bitcoin was Rs 6,00,000 and now it is ranging up to Rs 33,18, 520. Many investors are wondering about the sudden increase in the prices of bitcoins and the factors behind it.
Here are some potential reasons to answer why bitcoin prices are on the rise.
1. Institutional investment
Bitcoin is considered a safe haven asset due to its capability to survive inflation and volatility in the financial markets. In the current scenario, with societal and climate changes, people are getting more inclined towards holding less cash against tough times of intense market swings.
Recently, there was a trend where publicly traded companies like Microstrategy converted $425 million fiat currency into the treasuries over to bitcoin, considering it to be a store-of-value. Since then, several companies have followed the same trend.
The confidence bitcoin has gained in the corporate sector has added more value and merit to be the best cryptocurrency in India.
2. Considered as a means of payment
Another reason for the growing appreciation and recognition of increased prices is the adoption of bitcoin as a means of new payment method. Paypal, a financial technology company recently allowed its users to buy, sell, exchange and accept bitcoin and other altcoins as a form of payment.
This news regulated the price of bitcoin to rise and set a new target for other digital assets. Along with Paypal, Venmo also declared the integration of cryptocurrencies which will be used by more than 40 million account holders. This led to more accessibility and significant growth in the prices of cryptocurrencies including bitcoin.
3. The rising cost of production
Due to the rising demand and growing mining network, bitcoin’s price is going up but so do the difficulty level of mining. The whole process results in increasing marginal cost to produce a bitcoin.
Its mining requires a great deal of concentration, time and resources to successfully mine a bitcoin. Now, the increased channel turns out to be more challenging and expensive which leads to the rising cost of the production and affect the ultimate price of a bitcoin.
4. Easy accessibility to public
Cryptocurrencies are digital assets that can be used as a store-of-value and a mode of exchange. It has just established itself as a legit trading option and a new class to the existing assets over a few decades.
Even some people do not consider it as a medium of exchange but they do buy bitcoin for its deflationary store-of-value during inflation times. Especially, in India, when the ban against the cryptocurrency charged by RBI was lifted, there was a huge surge of interested investors in the market.
Since then many platforms such as Wazirx have received funding to increase the accessibility of cryptocurrencies.
If the rising prices of cryptocurrencies are making you reluctant to buy or invest in them then understand that it is just a beginning. With more countries accepting digital coins, it is certain to have cryptocurrencies as the mainstream method of payments. Hence, if you have made your mind then no need to wait any longer and start investing in bitcoin.