Written by Norman Isaac Mwambazi

Bitcoin trades above $50,000 for first time in 3 months

The largest cryptocurrency globally by volume traded and market capitalisation, Bitcoin fell miserably from its all-time highest price of $64,000 …

The largest cryptocurrency globally by volume traded and market capitalisation, Bitcoin fell miserably from its all-time highest price of $64,000 in April to as low as $30,000 in June this year. This drop, which is primarily attributed to the decision of Chinese regulators to restrict bitcoin mining in China- citing its carbon footprint that affects the environment- had numerous critics predicting doomsday for crypto investors. Many novice cryptocurrency investors started questioning their choice of investment.

However, those that held on tight to their bitcoin investment can breathe a sigh of relief if the ongoing rise of this digital asset’s price is an indicator of anything. Yesterday, Sunday, August 22, 2021, Bitcoin surpassed $50,000 for the first time in three months, continuing the trend it started over two weeks ago.

According to data from CoinDesk, bitcoin’s market value is up 2.5% over 24 hours and is currently trading at $50,213, the highest price it has traded at since May 15. Despite its meteoric drop in April and the struggles of May and June, Bitcoin has grown 71.4% year-to-date.

This is not the first time bitcoin has crossed the $50,000 mark. Still, this rise in value has caused greater excitement since there have been several developments in the crypto industry; the infrastructure bill has clauses that could affect cryptocurrency players and the continued criticism by conservationists regarding its mining.

Although Bitcoin’s price keeps rising, its daily trading volume is relatively flat and declined for a few days before it hit this mark.

Toby Chappel, the head of trading at Zerocap, a Digital Asset Investment Firm, told CoinDesk via Telegram that the market continues to hover over the 200-day moving average with bulls still in play. Still, the excellent performance of other cryptocurrencies like Ether, Cardano, Polkadot, and Uniswap, among others, have provided a supporting bid for Bitcoin over the previous few days.

Chappel added that although current bitcoin futures pricing is different from what it was at the beginning of the year, the asset is showing signs of medium-term pricing in the form of long interest from investors.

The US Federal Reserve Bank, which put in place several measures last year to shield the economy against the adverse effects of the coronavirus pandemic, will meet at the end of this month to see if the economy is strong enough for them to take the foot off the brake pedal, among other measures. Chappel believes that whatever comes out of that meeting could affect the global liquidity and both the stock and crypto market at large. In March late last year, the Federal Reserve decided to slash interest rates and has kept them at a near-zero level since then.

“Any move by the Fed would be negative for price action and involve possible contagion from a risk-off event in traditional markets,” Chappel told CoinDesk.

Apart from Bitcoin, other cryptocurrencies that fell when it fell have mirrored its rise in the same period. Ethereum’s Ether, Litecoin, Dogecoin, Cardano, and Uniswap, among others, have all appreciated price, rising from between 2% and as high as 12%.

Cryptocurrency critics base on its high volatility to discourage investors, but the fact that more mainstream companies are accepting it and investing it sends a clear message that cryptocurrency is penetrating more sections of the economy.

Last week, two key announcements came out that sent excitement and improved confidence amongst crypto investors.

On Thursday, August 19, 2021, Coinbase Global Inc. (ticker: COIN) Chief Executive Officer (CEO) Brian Armstrong announced via Twitter that the company had received board approval to buy as much as $500 worth of crypto and that it will also invest 10% of its profits in cryptocurrencies. As of February 2021, the company held bitcoin worth $230 million, but it has also been reported that it holds $48.9 million in Stablecoin, $23.8 million in Ether, and $34 million of other digital assets other crypto assets in its portfolio.

The second announcement was on Monday, August 16, 2021, when digital payment services provider PayPal Holdings Inc. (ticker: PYPL) revealed that it is soon launching a service on its platform that would make it possible for people to buy, hold, and sell digital currencies in the UK starting this week.

This is the first time PayPal is opening up crypto services to customers beyond the US and is a solid sign of growing institutional acceptance of cryptocurrencies that will soon push them into mainstream use. PayPal said its new service would support four different cryptocurrencies, namely Bitcoin, Ethereum, Litecoin and bitcoin cash.

It should be noted that before this, PayPal has been allowing its users to pay for goods and services with bitcoin, Ether, and other cryptocurrencies with its “Checkout with Crypto” option. PayPal has not yet added crypto on its balance sheet, citing high volatility.

Other developments that have worked in favour of the crypto-verse in the past three or so months include comments from established crypto investors and proponents like Twitter Inc.’s (ticker: TWTR) CEO Jack Dorsey using his platform to spread the gospel about bitcoin. In Europe, German legislators passed a law towards the end of last month which allowed institutional funds to invest up to 20% of their asset value in cryptocurrency, giving these funds the green light to explore the options of adding crypto to their balance sheets.  

Numerous individual investors and big industry players bought the bitcoin “dip”, as Luno head of business development noted that “there was a lot of buying around the $29,000 to $30,000 level when bitcoin was roughly at a 50% discount. Lots of large players took advantage of those prices.” Luno is a leading cryptocurrency company with operations in 43 countries across the globe and over 8 million customers.

As bitcoin keeps rising, data from Coinmarketcap shows that the value of the entire cryptocurrency market stands at more than $2.14 trillion, with bitcoin taking the lion’s share with over 44% of the whole cryptocurrency market value.