Since the start of the year, the digital currency bitcoin has received extensive media coverage as the price of one coin increased from $1,000 to over $4,750 in only nine months. If you have wondered why bitcoin has rallied so much, you will find out in this article.
If you have wondered why bitcoin has rallied so much, you will find out in this article.
Increased global awareness has boosted demand
As bitcoin managed to move into the global media limelight, bitcoin awareness has started to grow substantially around the globe. Bitcoin has not only become known as a digital currency that can be used to send and receive low-cost digital payments but also as a potentially very lucrative investment.
As more and more people are finding out about bitcoin, more and more people are also investing in it, which helped to push its price up in the last twelve months.
Bitcoin acceptance is growing among governments
When bitcoin first gain a certain level of media coverage, lawmakers and regulators were quick to warn citizens about the risks of dealing in digital currency and often linked bitcoin with the criminal underworld due to the decentralized and pseudo-anonymous nature of bitcoin transactions.
This negative stance among lawmakers, however, has started to change. Japan, for example, officially declared bitcoin a legal payment system in April 2017 and, thereby, fully legalized bitcoin to be used as an investment as well as a spending currency. Other nations, including the Philippines and Vietnam, have announced that they will follow suit. Even Australia is considering legalizing the use of bitcoin as a currency.
Increased acceptance by governments and regulators, of course, has bode well for the digital currency’s price as more and more individuals are starting to buy bitcoin as its acceptance grows.
More and more investors are jumping on this new asset class
So far investments in bitcoin have been driven by private investors. Since the start of the year, however, more and more established investment houses have started to invest in bitcoin on behalf of their customers.
Furthermore, a wave of new digital currency-focused hedge funds has been hitting the cryptocurrency markets this year, which has created further upward pressure on the price of bitcoin and other digital currencies.
Despite bitcoin’s exuberant rally and high returns potential, it is important to keep in mind that bitcoin is a high-risk asset class. Hence, it would be wise to only place a small amount of your overall portfolio in the digital currency if you want to invest in it.