1/ What's behind all those crazy prices for cryptocurrencies?
At time of writing, Bitcoin price stands at over $6,000 per coin. The cryptocurrency market has seen a series of volatility this year. As we enter another week of buying new coins, it seems that more than just a few factors are responsible for some of our current turmoil. For example, recent events have shown that central banks may be keeping interest rates low to encourage borrowing for businesses and individuals who need capital. This is good for startups that aren't able to access finance or can't get their products through traditional channels. However, with the global economy currently in a recession thanks to pandemic-related supply chain disruptions, there's reason to believe that interest rates will rise in 2020, likely further due to the growth of inflation. While many of us remain cautious about economic conditions in 2021, analysts are predicting that 2021 could see an increase in bond yields and dollar weakness — a positive move in such circumstances. In addition, several economies have been experiencing extreme weather events that affected commodity prices and disrupted the global trade and commerce. Many people worry how much damage might have occurred as a result of these events.
2/ Have things reached their highest levels ever?
The fact that the world has entered into a second lockdown seems to have pushed markets down and raised eyebrows about what other countries will have to deal with in order not to fall back into serious trouble. When we look at various currencies to illustrate how they've risen or fallen, it is important to remember how the global economy has become more interconnected in the past few years. Although the initial shock and panic of March and April could be partly attributed to the fear of spreading COVID-19, now, the focus seems to shift to whether the worst of the spread will be avoided by governments restricting cross-border travel in order to protect populations from coronavirus. Some investors are also starting to wonder whether China could impose tariffs on European goods. There are still uncertainties regarding when we can return to normal life and what kinds of goods each country needs. We all know that bitcoin’s record, which started its meteoric ascent in 2009, is yet to be broken but still remains one of the strongest performers in 2018 alone, up almost 8,000%.
3/ Where did all that cash go?
Bitcoin traded at a high of around $20,000 per coin in late June and then dropped below $10,000 in early July. At the peak, people were speculating that bitcoin would be worth more to them because of the possibility of a massive boost in its value if Trump won the election. Then, things changed. Bitcoin fell like a house of cards over the next couple of weeks. Its biggest drop was around September 25, when the market collapsed after the U.S. Federal Reserve issued a statement warning about a potential spike in US interest rates. Since then, the currency has recovered sharply. If a big correction happens and the cryptocurrency rises to $12,000 again, that scenario looks real. Even then, however, the future seems uncertain. It remains possible that bitcoin’s value continues to rise, albeit at a smaller rate due to higher risk. Despite the uncertainty of how long cryptocurrency will last, some investors are getting overly confident and think they've finally cracked the code regarding bitcoin. Regardless of how it ends, there is always something to appreciate about this once revolutionary technology, even though it has gone through a lot of volatility since 2009. After all, there's no denying the immense benefits of using blockchain and cryptocurrencies for everything from online businesses to entertainment to payments. That being said, the current situation will have an effect on many companies, including small start-ups and large corporations. Moreover, despite the growing popularity of digital currencies globally, many industries will continue to face challenges in implementing cryptos as payment methods and accepting fiat payments. The global currency crisis also means that it takes a while longer for companies to understand how to implement cryptocurrency transactions and convert them into fiat.
The bottom line: bitcoin is at a point where we may already be seeing the beginning of a bigger disruption in the cryptocurrency industry and what people need to accept that change. To better prepare for this event, people need to embrace the change and embrace all sorts of changes. Now, instead of worrying about short-term profit margins, focus on paying attention to long-term stability and staying invested in the projects on track. These are the only ways to avoid major issues and ensure you don't miss out on any opportunities. With the right approach, cryptocurrencies could become a valuable source of income in the medium term, especially at the moment with the lowest interest rates and significant devaluation. Not only that, but the opportunity for long-term gains with the development of smart contracts will allow the world to gain trust in the use of blockchain technology, as well as its applications. The possibilities are endless, but with the correct investment, we won't need to wait a decade before we finally hit the jackpot. You should follow this advice now and watch out for others in the near future and the year to come.
You must be logged in to post a comment.