Bitcoin is up by nearly 50% in 2021. In terms of price gains, the world’s largest cryptocurrency fell behind other competitors like Ethereum, Cardano, and XRP. However, the network activity of Bitcoin saw the best year in its history. The total number of BTC addresses, mining revenues, trading volumes, and institutional accumulation reached its highest level on record.
While short-term traders prefer price jumps over other indicators, long-term holders favor strong fundamental growth in a particular digital asset. That’s the case around Bitcoin right now. Although Bitcoin touched an all-time high of over $64,000 in April 2021, the price of BTC saw a major correction in the following months. So, why Bitcoin network is getting stronger despite the negative price sentiment around the world’s most valuable digital asset? There are several reasons behind it.
Firstly, large corporations around the world including companies with a market capitalization of over $100 billion purchased Bitcoin in 2021. Tesla and Square were some of the leading names. The accumulation of BTC from Tesla and Square inspired other global companies like Meitu, one of the leading technology firms in Asia, as well. A surge in institutional adoption gave immense confidence to retail investors as they jumped into the crypto market. According to a recent survey by Crypto.com, there are more than $200 million cryptocurrency users around the world.
Secondly, Bitcoin survived the toughest crypto mining restrictions from China in 2021. Bitcoin mining rate dropped by nearly 50% following China’s mining ban announcement but it recovered substantially in August and September. In addition to the recent recovery in BTC’s mining rate, Bitcoin address activity also touched a record high. More than 811,000 BTC addresses are holding at least 1 Bitcoin. Long-term holders now own 80.5% of the total BTC supply, an all-time high.
So, is it possible for Bitcoin to hit the price level of $500,000 in the future? Analysts believe ‘Yes’. While there are uncertainties regarding the future price action of Bitcoin, there are possibilities for the world’s largest cryptocurrency to reach $500,000 in the coming years.
Finance Magnates asked industry experts about their views on Bitcoin’s strong network activity and a jump in BTC’s institutional demand. Mati Greenspan, Founder and CEO of Quantum Economics, believes that Bitcoin is an established asset now.
No More Bitcoin FOMO?
“By now, bitcoin is well-established in the mainstream market as a long-term store of value asset. The FOMO phase seems to be over at this stage and many institutions are likely in accumulation mode. Over the last month, we’ve been seeing outstanding volumes on the bitcoin network with new records being set for the amount of value transferred on the blockchain. The current record of $383 billion worth of bitcoin transferred in a single day is approximately four times anything we’ve ever seen before. Much of this activity is coming from wallets with a larger balance, so-called whales, no telling what they might be up to,” Greenspan said.
Commenting on the future price action of BTC and its volatility, Greenspan mentioned: “As we’re talking about one of the most volatile assets on the planet, my target range remains wide. The price of bitcoin will likely be between $5,000 and $5,000,000 by the end of the year.”
BTC Mining and Institutional Adoption
Bitcoin-related investment products attracted more than $4 billion worth of institutional inflows this year. According to the recent digital asset report released by CoinShares, global cryptocurrency asset management firms now hold more than $35 billion worth of BTC assets.
Commenting on the latest surge in Bitcoin mining activity and a spike in institutional inflows, Marc P. Bernegger, Board of Directors of Crypto Finance Group, said: “It is fascinating to see how miners relocated from China and after a sharp drop the hash rate is recovering to new all-time highs. This is a real stress test for the whole Bitcoin ecosystem and shows how reliable and decentralized the whole network has become. There is still an increasing demand from institutional investors moving into the digital assets space and we will hear about a few well-known names publicly announcing their involvement in Bitcoin soon.”
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