Bitcoin is at $10,000

Saturday, May 9, 2020
No items found.

On Thursday, the value of Bitcoin rose by 6%. According to Coindesk, this created a $13 billion bump over ther complete cryptocurrency market.

In total, this brings the value of the cryptocurrency market to $267 billion, as of the Friday morning after the rise, according to CoinMarketCap.

To compare the top three cryptocurrencies by market value, bitcoin would be first, now worth $181.5 billion. In second position is ethereum at a value of $23.4 billion and third place goes to XRP, with a value of $9.5 billion.

Recently, bitcoin has been rising in value and Thursday’s leap only compounds this. But in March, bitcoin hit a low on the 16th, at $4,944. Since then it has risen by 102% to reach $10,025 on Thursday. This is the first time the coin has moved above the $10,000 marker since the middle of February.

It looks like three primary causes are contributing to the improvement in value of bitcoin.

The first of these is an anticipated halving on May 11. At present, miners of bitcoin receive 12.5 new bitcoins for every block mined. On May 12, this will no longer be the case, miners will instead receive half that amount, 6.25.

This will reduce the amount of bitcoin entering the market in the future. Working on the supply-demand model, less bitcoin entering the market means a higher value of the ones already there. In the past, the time leading up to halving events saw large increases in bitcoin, as people tried to play the markets.

Every 4 years there is a halving event, in 2016 miners’ rewards went from 25 to 12.5, similarly in 2012 the number went from 50 to 25. Halving events are scheduled to take place every four years until the total amount of supply has been mined. This is not expected to happen until far into the next century.

The second contributing factor to the increase in bitcoin is that institutional investors are beginning to bring bitcoin into their portfolios more substantially.

The third element is a belief that more people are taking on board. This is that bitcoin can be used to hedge against inflation. Governments are capable of printing an unlimited amount of money for various reasons. However, just like physical gold, there is a fixed amount of bitcoin.

There is a fixed amount of bitcoin, this is limited to 21 million coins. Approximately, of this 21 million, 18 million have already been mined. Because of the impact of the coronavirus pandemic, governments around the world have had to inject money into their economies to reduce the economic impact of the virus. This however can cause rises in inflation. In light of this, investors have been strategising to use bitcoin as a hedge against inflation.

It is difficult to predict the longevity of this value, but it looks as if the halving event is being looked at favourably by investors, who are looking to get in there early. $10,000 has long been a psychological marker for the cryptocurrency that has caused it some difficulties in the past. With not long left to go before the event, time will tell just how the market reacts.