For Bitcoin, the $10,000 mark is an important one. It is not only the halfway point to the cryptocurrency’s all-time high, but it is also a point that represents significant sentimental value; crossing into the five-figure mark.
The Coin managed to achieve this feat once again this weekend, as it just pipped the $10,000 mark and managed to stay a little above it for an extended period on the day. The last time Bitcoin saw this significant milestone was September 22 last year. This represented a downward slide to $6,800.
Now, Bitcoin has been resurging as the beginning of the new year, and decade has been a promising one as January represented returns of 30 percent – the best returns for seven years in the first month of the year. Bitcoin’s continued boost through February now has many questioning what has caused this.
There are probably two overarching reasons that Bitcoin is seeing good returns this year. Firstly, and internally, the coin will be cutting its supply in May as the Bitcoin mining reward halving comes to being. Thus, it is a good time to try and stock up on coins.
On the external side of things, Bitcoin is also being seen more and more as a potential safe haven and hedge against issues in the global economy. Fears of a recession and the outbreak of the coronavirus have led to investors getting scared off from traditional markets.
Fear of missing out
While the path of Bitcoin is almost entirely, transparently laid out, in regards to its halving and total supply, the fact that the May halving is approaching is inciting a bit of FOMO. Investors and even miners, are keen to get their hands on some more of the precious digital currency before its supply is drastically cut and the scarcity rises.
In previous halvings, Bitcoin has climbed significantly in value in the proceeding weeks and months, but there is often always a rise just before the halving comes in as FOMO takes hold. This could well be the reason that Bitcoin is on the rise at the moment as time ticks down to the halving, investors are starting their grab.
A new hedge?
The fact that Bitcoin has been legitimized by institutional investors also has people looking at the digital currency as a hedge against financial uncertainty. There is a growing fear of a possible recession, and monetary policies are also suggesting that, but the Coronavirus is another spanner in the works.
SARS was a big hit to the economy in the early 2000s, but this time around, China is an even bigger economy, and the damage is already being seen. If the economy takes a hit from this virus, Bitcoin could be getting a bigger look in.