Hello dear virtual friends, how are you? This madness in the cryptocurrency market really thrilled me. All but one mostly grow. Is it time to sell cryptocurrencies or wait?
The price of Bitcoin continued to skyrocket. During the past week, the price of Bitcoin at one point exceeded the value of 41,000 US dollars, which is an increase of about 20 percent!
This development affected the movement of other cryptocurrencies, such as Ethereum, whose value increased by as much as 45 percent and at one point reached a value of close to 1,300 US dollars.
The basic question asked by cryptocurrency owners is whether the prices of cryptocurrencies will continue to rise or will they start to fall? That is, do you sell cryptocurrencies or wait for the price to rise further?
As we mentioned in the previous sequel, the main cause of the growth of cryptocurrencies, and above all Bitcoin, is the entry of large companies into the crypto market. The purchase of large quantities of cryptocurrencies, ie an increase in demand, encourages price growth.
Let us remind you that the amount of Bitcoin is limited to 21 million coins, while about 18.5 million coins have been "mined" so far. We conclude that there are still 2.5 million coins left to be "mined" waiting for their owners. We have written about the method of "mining" in past sequels. In short, it is about calculating the hash value and comparing the calculated value with the hash values ??of Bitcoin coins that have not yet been discovered. It is important to keep in mind that the fewer coins left, the harder it is to find them and that their "mining" is becoming more expensive because a lot of electricity is consumed. However, the increase in the price of Bitcoin may motivate the mining of the remaining coins to intensify.
It is interesting that despite the increase in the price of Bitcoin, the volume of its daily use is still below the record level, when the largest number of transactions was realized in one year. It is obvious that a smaller number of transactions are being performed at the moment, but larger amounts are in question, which speaks in favor of the fact that large players have entered the game.
An important fact is the fact that the US state administration has also started investing its money in cryptocurrencies. Thus, the mayor of Miami stated that he could invest a part of the city's cash reserves in Bitcoin, because he believes that Bitcoin is the most stable investment during an unstable economic period.
The rise in the price of Bitcoin will certainly encourage speculative transactions, which will additionally cause the growth of cryptocurrencies. Growth based on speculation produces an unrealistic value that will sooner or later lead to a decline in the value of the cryptocurrency. It is not easy to determine which part of the value of a cryptocurrency is a consequence of real investments, and which part of the value is the result of speculation. According to available data, for now, most of the value is based on real investments, while the inclusion of speculative players is still expected.
Experts' predictions are moving in the direction of further growth of Bitcoin and other cryptocurrencies for three main reasons. Large crypto investors do not sell their coins, on the contrary, they continue to buy them, as we mentioned in the previous part of this text. Further, as we mentioned, despite the currently great popularity of Bitcoin, the number of everyday new BTC addresses has not yet reached the level of 2017. This means that the growth of Bitcoin is mostly organic, not speculative.
Finally, the entry of state investors into the crypto market provides additional certainty that the price of Bitcoin will continue to rise. However, the general advice is to be careful because speculative players are expected to enter the game.
