Bitcoin Touches $12,000 Again, Confidence is Keyword
Growing confidence in digital assets tops the macro trends cited by insiders as influencing the current upward movement of the world’s largest cryptocurrency. Though with a slight retrace as at this writing, Bitcoin zoomed past the $12,000 price tag on Monday Aug. 16 to touch a year high (since July 2019).
The blockchain industry continuing to mature and earn confidence from new participants is a major factor for the upswing, says John Wu, President at AVA Labs. “Widespread adoption by incumbent institutions, as well as the success of business strategies embracing these assets–Bitcoin recently created the biggest earnings surprise of the week for a major traditional payments firm–are beginning to establish crypto as an integral asset class in the traditional capital markets.”
Luciano Nonnis, CEO of DXone, added that there are a number of other obvious signs of confidence in the crypto-markets. “Trading volumes are steadily increasing, important resistances have been broken (USD 10.3K), as well as USD 12K–the all time high since March 2018. News of mass adoption such as Bitcoin’s integration into Paypal and Mastercard services, indicates an interesting future and a huge possibility for a bull run with new all time highs.”
He cited the decreasing interest in fiat currencies in general, the anxiety regarding the global financial system and rising inflation as increasing buyer interest in markets that offer stable commodities including Bitcoin which he says is “an irreplaceable investment alternative for people looking for stable deflationary assets.”
“People keep waking up and thinking about why a printed dollar, which can be printed endlessly, can still be worth something,” he said. “To this day, Bitcoin has never disappointed in terms of performance and represents the general ideology of the digital, incorruptible currency or store of value. We should expect a growing interest in Bitcoin due to the “failure” of the traditional monetary system, but we could definitely be more positive if people would not choose Bitcoin as a sanctuary, but as what it really represents.”
For Konstantin Richter, CEO of Blockdaemon, the upswing “is a signal of the growing confidence in the digital asset economy” among other things. He said macroeconomic conditions are fuelling demand for assets which are unaffected by inflationary concerns and US dollar debasement as a result of government’s quantitative easing is not helping either as it has triggered rallies in gold and other safe haven assets which Bitcoin and cryptocurrencies have also been placed of late. Richter said:
“The rise in institutional adoption of cryptocurrencies and blockchain technology is also driving confidence in the market. The decision by the Office of the Comptroller of the Currency (OCC) to grant national banks in the US permission to operate crypto custody services will finally allow financial institutions to custody digital assets. Adoption of Bitcoin trading services by incumbent payments institutions such as PayPal are also significantly increasing levels of adoption by bringing crypto to a wider demographic of users. Additionally, projects this year have been accelerated by having strong infrastructure providers supporting their advancements, as well as network scalability and stability.”
Wu and Richter also mentioned that the boom of decentralized finance (DeFi) could have contributed to the demand and use of crypto assets. While Wu believes crypto-savvy investors are finding yield in DeFi protocols and willing to trade-off the systemic risks they see in traditional finance for the product risks of this maturing ecosystem as returns from traditional investment vehicles reach record lows, Richter said the July rally for DeFi tokens could be influencing Bitcoin price “as investors pour their profits into Bitcoin.”
Bitcoin has so far been up by about 70% making it one of the best-performing assets in 2020.