Why did Bitcoin rise on April 1st

Five reasons why Bitcoin continues to rise

The Bitcoin course is around 50,000 euros. Reason enough for economists to take a closer look at the brief history of Bitcoin, which is only twelve years old. Result: Five reasons are responsible for the fact that the little one has a growth spurt from which he can no longer be dissuaded so quickly. However, short-term and painful break-ins are safe.

The cryptocurrency Bitcoin, which saw the light of day only twelve years ago, is moving at rock'n-roll pace: two steps forward and then one backward. The number of fans - and critics - increases with every course caper. Some invest with a view to making quick money. Others compare the hype to the infamous tulip bulb bubble from 1637 in the Netherlands, the first well-documented speculative bubble in economic history.

In the USA, a real guild of Bitcoin disciples has developed, which is reason enough for economic historians, such as those of the business magazine "Fortune", to critically examine the growth spurts of the digital currency, but also its dropouts and interruptions. You have divided the development of Bitcoin into chapters. Chapter one extends from February to April 2011 and is called “DPDay”, the dollar parity day. At that time, the Bitcoin bull run reached its peak in February, a Bitcoin was worth more than a dollar for a short time. The rise of the cryptocurrency all the way up to this brand was of tremendous importance to its development. It started back in July 2010. Bitcoin was only worth a few cents per dollar when it was first mentioned on Slashdot, a news platform for techies. The increased interest caused the price of a bitcoin to jump to one dollar on February 10, 2011, resulting in a second post on Slashdot that attracted further attention. This basic cycle prevails: real technological or infrastructural advances drive the price up, then the price itself generates further, less sustainable growth.

The first really wild Bitcoin bubble and with it chapter two begins a short time later with an article from June 1, 2011 about the "Silk Road" market in the Darknet. The article on a now defunct news platform described in part barely any facts how drugs can be bought anonymously with Bitcoin on a hidden website. It appeared immediately after several new Bitcoin exchanges opened, which made buying the token easier. The combination of awareness and access catapulted the value of a bitcoin from $ 10 to almost $ 30 in just one week. Then the hype collapsed and the currency plummeted for months, ending up at just over two dollars.

Almost three years after Bitcoin broke the barrier for dollar parity, it approached another crucial threshold and cracked the $ 1,000 mark in late November 2013. But the price was purely speculative and didn't even last two weeks. By mid-December it had broken in by half. It was as if lead stuck to the course, for two years it went from low point to low point. In January 2015, it was a comparatively modest $ 172. After the first breakthrough, prices hadn't made $ 1,000 for more than three years until another chapter and thus the craziest of all Bitcoin bubbles began in 2017. It is characterized by the fact that investors were not even targeting Bitcoin this time. Instead, the 2017 bull run was largely fueled by a wave of newly minted so-called "alternative" cryptocurrencies that started with great expectations. The general euphoria dragged the Bitcoin with it, so that it landed at 19,665 dollars on December 15, 2017. Contributing to its course was a novel process known as Initial Coin Offering (ICO) that allowed creators of new currencies to sell their offerings directly to investors. Bitcoin benefited from the run on these offers, but its share of the overall crypto market fell. It all ended in tears, ”write the authors of“ Fortune ”. Just a week after the peak, Bitcoin fell more than 25 percent. Other cryptocurrencies fell even further. In the long run, many of the cryptocurrency projects turned out to be brazen scams. ICOs have since been banned by the US Securities and Exchange Commission.

And where are we now? There are five reasons that Bitcoin will continue to improve in the long term.

First of all, there is the corona pandemic, in which investors are setting up their portfolios on a broad basis. They want to be prepared if the cheap money strategy pursued by central banks around the world should go wrong. You observe: The amount of money in circulation in US dollars and euros is increasing continuously - there is no end in sight. The amount of Bitcoin is limited, however, which makes it a kind of digital gold and a safe haven for staunch followers.

Second, more and more companies are accepting Bitcoin as a means of payment. Tesla's announcement that it would accept Bitcoin and invest in cryptocurrency itself, PayPal's entry into the crypto industry - all of these are accolades for the cryptocurrency. They lead other companies to consider joining.

Thirdly, the debates about the introduction of digital national currencies are fueling the existing cryptocurrency. A digital euro or dollar would be controlled by the respective central banks and thus a different construction, but the projects also show how seriously monetary politicians are now taking digital currencies and thus directing investors' interest to Bitcoin and Co. Last but not least, institutional investors jump on the rolling ones Train.

Fourth, the effect of so-called Bitcoin halving unfolds. The supply of Bitcoin is thus regularly artificially reduced. While this limits the development of the amount of Bitcoin money, the central banks are constantly increasing their holdings. When it was first halved in November 2013, the value rose from around twelve dollars to almost 1,150 dollars within a year. The second halving followed in July 2016, when the price was around $ 650. At the end of December 2017, the unit was worth just under $ 20,000. The most recent halving took place in 2020. Since then, the price has risen by more than 700 percent.
Fifth, finally, access to Bitcoin has become easy. Brokers offer it to everyone. The “German variant” of Bitcoin comes from East Westphalia. More precisely from Bad Herford. There, the Bitcoin Group, the operator of the largest German trading center for cryptocurrency, is located: Bitcoin.de. The boss is called Marco Bodewein. He and his team of around 30 have a mission: They want to build Germany's first crypto bank.

Time plays for them. The trading center wins, says Bodewein, who also runs the Futurum Bank behind it, "in the mid 100-digit range new customers" every day. Bitcoin traders want to reach the one million mark this year. The company's own holdings of cryptocurrencies recently cracked the 100 million euro mark. The largest share is accounted for by Bitcoin, the rest is distributed among other popular crypto currencies.

These five reasons are what make analysts euphoric. Forecasts such as those of the major bank JP Morgan predict a bitcoin rate of more than $ 140,000. Is that justified? Banker Bodewein doesn't quite share the euphoria: “Everyone has to decide whether they want to use and accept Bitcoin as a means of payment. I wouldn't do this. Bitcoin is too valuable for that, ”he says, adding:“ I don't pay with gold either. ”At the Bundesbank, too, the experts pour water into the wine: Bitcoin and Co. are highly speculative crypto assets, he says Board member responsible for payment transactions is Burkhard Balz. He still thinks a total loss is possible. Because: “At its core, it is always about people being able to trust a currency. Only if you have confidence will prices remain stable. Establishing this trust is the most important task of the central banks. No economy can prosper in the long run without stable money. "

Oliver Stock

Also read: tops and flops of the week, among others. with Westwing, Home24 and Credit Suisse

01.04.2021 | 15:45