You’ll get a different response depending on who you inquire about the future of cryptocurrencies. A cryptocurrency is a digital currency that is created and managed through the use of advanced encryption techniques with help of blockchain development company. With the launch of Bitcoin in 2009, cryptocurrency transitioned from an abstract term to (virtual) truth.
Some experts are worried about the threats that lie ahead, whilst others believe that cryptocurrencies can play an important role in our future. Optimists may have a legitimate excuse to keep their optimistic attitude. Despite the COVID pandemic and the economic turmoil we’ve seen this year, Bitcoin’s mid-November 2020 run has exceeded all forecasts, and the cryptocurrency is on its way to an all-time high. Bitcoin’s valuation has more than doubled since December of last year, and some say this is just the beginning of a long bullish rally.
What makes the Bitcoin Price Rally Different during this time?
According to a number of analysts, the latest Bitcoin boom (November 2020) bears no resemblance to the currency’s notorious December 2017 spike, when it shattered all previous records.
Those who bought into the legendary Bitcoin rally in the winter of 2017 were disappointed when the currency collapsed soon after. However, many argue that individual investors, rather than institutional funding, were largely responsible for the previous boom. Bitcoin’s value collapsed after the individuals cashed out.
Bitcoin is currently being marketed and backed by institutional investors. Fidelity Investments, JP Morgan, and PayPal are among the major financial companies that have entered the crypto market. Fidelity has its own digital asset division, JPMorgan Chase has launched its internal digital token, and PayPal will begin accepting payments via crypto wallets next year. Bitcoin has also caught the attention of major Wall Street hedge fund managers like Paul Tudor Jones. Jones has also indicated that Bitcoin would act as an anchor to keep us from devaluing our currency, similar to how the gold standard did in the 1970s.
They are not only endorsing it by allowing anyone to purchase it, but they are also purchasing it. Big companies like Square and Galaxy Digital Holdings are stockpiling Bitcoin worth millions of dollars. This is potentially good news, as it means that Bitcoin investors will be less tempted to sell during this boom, as institutional assets are rarely purchased with the aim of making a fast profit.
Another encouraging indication for this streak is that few people seem to be paying attention to Bitcoin’s meteoric rise. Back in 2017, Bitcoin’s spikes appeared to consume news and discussion, causing many people who had never thought for cryptocurrency to begin investing in the hopes of being wealthy. The price fell dramatically as a result of the unsustainable frenzy.
This time, coverage of Bitcoin’s rally has faded into the past, and it is still being debated by those who are heavily invested in cryptocurrency and truly trust in the potential of blockchain technology and its universal acceptance. Maybe there isn’t a frenzy this time and some people are afraid that another fall is on the way. Or maybe it’s because this bull run is legit.
While many are cautious, there is a lot of hope about the prospects of cryptocurrencies in the new year and beyond. However, there are some risks to consider.
So, What Are the Risks involved?
One of the biggest drawbacks of Bitcoin is that it remains very unpredictable. It will rapidly rise and fall in a matter of weeks, days, or even hours. Furthermore, security threats such as 51 percent attacks, in which miners gain majority control and block transactions, can emerge.
However, the latest surge of institutional interest, as well as businesses such as PayPal making Bitcoin more available to people all around the globe , indicate that blockchain is becoming a more assured fixture in our financial future.