• The beloved cryptocurrency has seen high levels of volatility over recent days, with its value rising above US$41K on the first day of August.
• The recent price movement in Bitcoin is not something out of the ordinary for crypto enthusiasts.
• Authorities and institutions worldwide are planning to create their versions of digital currencies soon, which could pose a threat to Bitcoin’s popularity.
Investors and believers in the magic internet money anticipated that Bitcoin’s fall from glory would be short-lived. In late July, their expectations came to fruition when the beloved cryptocurrency regained momentum after the market crash and began its upward trajectory.
In fact, the recent developments have left the crypto world abuzz with the possibility of Bitcoin and Altcoins bouncing back to their previous highs, with expectations of a bullish run on the move. The buildup of a significant short position in the crypto market seems to have filtered out sceptics to some extent, leaving behind mostly those investors who genuinely believe in the power of crypto.
In terms of price action, Bitcoin marked a strong entry into August, with its value rising above US$41K on the first day of the month. However, the cryptocurrency could not sustain this momentum and eventually lost some ground, plummeting below US$40K. While this sort of volatility is worrisome and bizarre for several investors, the price movement is not something out of the ordinary for crypto enthusiasts.
However, fears loom that the recent ambiguity in the currency’s value could tarnish the once untouched reputation of Bitcoin. In the given scenario, it will be interesting to see whether the cryptocurrency will retreat to its pre-pandemic performance or increased volatility will fuel scepticism over its looming recovery.
Big Names Backing the Coin
Over recent days, Bitcoin was broadly seen to be extending its upside rebound before showing some signs of weakness. A part of the credit goes to Tesla CEO Elon Musk’s statement at the B Word Conference about the future of Bitcoin, which initially brought some momentum to the internet’s currency. Tesla recently shared its plans to resume the Bitcoin payment option once its miners opt for more renewable energy sources, giving a much-needed leg up to the cryptocurrency price.
Meanwhile, speculations of Amazon entering the crypto market fuelled an impressive rally in the cryptocurrency price last week. However, these rumours were immediately put to an end by the company as it clarified that it has no plans to accept the digital currency. JP Morgan’s decision to provide its wealth-management clients unconstrained access to Bitcoin and other digital assets also delivered a leg up to Bitcoin price.
Adding further tailwind, the number of crypto users has reached an all-time high and is continually rising, reflecting the increasing popularity of digital currency. This widespread recognition has created room for further adoption of Bitcoin by some big conglomerates, like Tesla. Additionally, Bitcoin users may now be able to jump on the ETF bandwagon as soon as the much-awaited approval by SEC arrives on the same.
However, increased acceptance comes with a higher level of regulatory checks to ensure the safety of all those involved. Towards this end, the US legislators have asked for stringent rules to be implemented on all cryptocurrencies, a move that could result in higher taxes.
Crypto Revolution: A Threat to Bitcoin?
With big names attaching themselves to the world of cryptocurrency, crypto lovers expect the value of Bitcoin and its counterparts to take off within a short period. The optimistic price projection seems to be based on crypto enthusiasts’ expectations of Bitcoin’s widespread adoption.
Keeping regulatory checks aside, widespread acceptance of Bitcoin can pose some serious challenges for the magic internet money and other cryptocurrencies. One such challenge is countries launching their own digital currencies.
To fight the decentralised component of cryptocurrencies, several authorities across the globe are planning to roll out their digital currencies. The latest country to join the trend is the United Kingdom, which is exploring the possibility of formulating a new digital currency known as ‘Britcoin.’ While the move indeed instils faith in the technology backing cryptocurrencies, it has emerged as a significant threat to the existing digital currencies.
Experts speculate that as and when other, more developed, and highly regulated cryptocurrencies enter the market, Bitcoin may lose the status it currently enjoys. Additionally, institutions and governments could potentially facilitate the mass adoption of their sell-developed currencies, making it harder for Bitcoin to maintain its position.
However, the enormous demand for Bitcoin currently seems sufficient to keep its head above water for some time, even if there are few roadblocks on the way. Given these hardships, it will be enticing to witness how Bitcoin will retain its impression as a vital asset class and continue to gain the belief of seasoned investors.
All in all, the ever-growing demand for Bitcoin can drive exponential growth in the crypto market, even in the face of minor setbacks. However, on the way, the market must pioneer challenges that may unfold in the form of increased regulatory checks, newly launched currencies, and delayed authority responses.