Regulators and mainstream investors have paid more attention to Bitcoin than ever before in its 13-year journey.
Mainstream Acceptance After 12 Years
Bitcoin started the year with a bang on the back of the momentum generated in late December 2019 by breaking a new all-time high of around $40,000, posting nearly 40% gains in the opening week. However, the flagship cryptocurrency token then took a downturn and dropped to the $30,000 range towards the end of the month.
Soon after, the cryptocurrency market was elated to find a new supporter in Tesla’s CEO, Elon Musk, when it was announced on February 8 that the company had purchased $1.5 billion worth of BTC tokens at the time. Simultaneously it was revealed that Tesla would also begin accepting Bitcoin as payment for their products and services.
“I’ve got to watch what I say here because some of these things can really move the market. Many friends of mine have tried to convince me to get involved in bitcoin for a long time,” mentioned Musk in a conversation on Clubhouse at the time. “I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin. I think bitcoin is really on the verge of getting broad acceptance by conventional finance people.”
This mainstream acceptance from one of the world’s richest men and the leading electric vehicle company in the world sent the price of Bitcoin into an upward frenzy. It led to the price of BTC breaking the $50,000 barrier for the first time ever to hit a high of $57,539 on February 21. This momentum continued till early March, when the token rallied beyond $60,000 for the first time to hit a then all-time high of $63,503 on Mar. 13.
The hype and mainstream attention around Bitcoin reached such a high that even one of the largest financial and banking institutions in the world, JP Morgan, decided to dip their feet in. In March 2020, the global banking organization launched its Cryptocurrency Exposure Basket (CEB). A debt instrument portfolio that consists of 11 stocks related to cryptocurrencies and blockchain technology directly or indirectly. These stocks are MicroStrategy, Square Inc., Riot Blockchain Inc., NVIDIA Corporation, PayPal Holdings Inc., Advanced Micro Devices Inc., Taiwan Semiconductor Manufacturing Company Limited, Intercontinental Exchange Inc. (ICE), CME Group, Overstock.com, and Silvergate Capital Corporation.
China Spoils the Party
The upward momentum for Bitcoin continued till May with the usual price volatility as witnessed with the token earlier. However, on May 21, China soured the mood for investors when the State Council’s Financial Stability and Development Committee announced a ban on Bitcoin mining citing financial risk concerns, as previously reported by Bsc.News. This led to Bitcoin’s price crashing below $50,000 for the first time since the token broke the coveted barrier.
Since China was one of the major countries involved in Bitcoin mining, it accounted for a significant percentage of the total Bitcoin hash rate at the time. The hash rate for the Bitcoin network dropped down to a yearly low of 57.47 EH/s, as per data from BTC.com. Due to this, the price impact of this ban was huge, and the slump for the market continued all through June and July. The token hit a yearly low of $29,807 on Jul. 20.
Despite the mining ban, the token recovered from this range due to several positive developments like Goldman Sachs restarting their cryptocurrency desk & confirming the execution of its first Bitcoin derivative trade in May and Morgan Stanley announcing three funds that enable Bitcoin exposure to its high net worth clients. Due to such announcement of institutional adoption and Microstrategy’s reaffirming Bitcoin purchases even during the dip led to the token gradually making its way past the $50,000 range yet again in September.
In this period, as previously reported by Bsc.News, Bitcoin was adopted as legal tender for the first time by a country, El Savdaor, on September 7. Since then El Salvador has become a country with a spotlight for its interaction with Bitcoin. The country is currently exploring ways to use lava from the Conchagua Volcano for Bitcoin mining and even planning a Bitcoin city at its base.
Another shock hit the crypto market when the Chinese government announced a blanket ban on all cryptocurrency transactions and activities on September 24. This ban extended to all cryptocurrency-related services in the region, entailing that all the firms and exchanges providing crypto services to clients in China had to shut shop as well.
The ban led to extreme Fear, Uncertainty, and Doubt (FUD) in the crypto market and caused the price of BTC to crash almost 9% in the immediate aftermath. A couple of weeks after this announcement, on October 8, the country’s largest retailer, Alibaba, banned the sale of any electronic accessories that could be used in cryptocurrency mining risks.
Bitcoin’s price recovered from this soon after as the Federal Reserve’s Chairman, Jerome Powell, revealing that the regulators have no plans of banning cryptocurrencies in the region. Iran lifting its crypto mining ban from the country after 3 months also contributed to the recovery.
The remainder of BTC’s journey in 2021 is covered in the next part; read on!
Source : bsc.news
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