The past year has been one of its kind. Many things happened in the year that would normally make investors wary, including the US-Chine tensions, Brexit, and of course, the global pandemic. However, even in the face of it all, the year 2020 was a remarkable year for bitcoin. The number one cryptocurrency rose from a year-low on the daily charts of less than $3,000 in the middle of March as pandemic fear grips everyone to just below $30,000 by the end of the year

Right from that time, the coin has continued to grow in price, reaching all-time highs above $40,000. This continually keeps bitcoin in the news every day while it also drives up the price of other cryptocurrencies. So, one might wonder if this sudden rise in bitcoin price will be another bubble as experienced in 2017. Well, if you have been thinking of investing in bitcoin but wondering if it is the right move at this time, this article is for you.

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Bitcoin Price Development; 2009-2021

Bitcoin was introduced in 2009 as the first-ever cryptocurrency. It was introduced as an alternative to the current financial system’s loopholes. When it was introduced, the coin was valued at $0, and just a very few crypto nerds would mine them as a collectible. But in 2010, the Bitcoin Pizza Transaction happened, and people started creating some interest in the coin, seeing it as a currency that could be used to purchase goods and services. 

By the time it was 2013, the digital currency has started gathering huge popularity among the people, driving up the price to about $1,000. And after the second halving took place, the coin rose significantly in value to $19,000. 

However, the bull market happened in 2017, and that marked a remarkable year for the coin too. The coin price rose about 20-fold at the time to almost $20,000, only to slide back to the low $3,000 a year later. Bitcoin price had settled at this price until the start of 2020, when it started gaining momentum again. And this time, it is a massive gain as bitcoin is now priced at about $46,000. 

What Is Responsible For This Rise In Price?

Several factors came together to contribute to this recent sudden surge in bitcoin price, including the recent pandemic, more financial giants getting interested in the coin, recent newly released bitcoin futures, and many more.

  • The recent global pandemic

This is no doubt one of the major contributors to the sudden increase in the price of bitcoin. The spread of Covid-19 caused a major crisis in the economy, and most people sought bitcoin as a hedge against the shaky economy. Some institutional investors such as Tesla, Microstrategy, Square Corp, etc., resorted their cash reserves into bitcoin, stating that BTC provides a way to store value against inflation. 

  • Third bitcoin halving event

Halving happens every four years, and it is a time when the rewards bitcoin miners get for mining the coin is cut down by half. The third halving brought about a drastic reduction of mining price, from 12.5 BTC to 6.25 BTC in May 2020. This led to a reduction in the amount of the coin in circulation, thus triggering a demand. 

After a steady rally was set off in October 2020, the value of the coin has been seen touching new highs. It crosses $20,000 in December 2020, $40,000 in January 2021, hits $50,000 in February, and now, it is globally valued at around $46,000.

  • Big names got interested in the coin

Bitcoin and cryptocurrency, in general, have received lots of attention this year because of the involvement of some big names in the crypto world. For instance, billionaire investor Paul Tudor Jones and insurance giant MassMutual have invested heavily in the coin. Even former naysayers like JP Morgan now say that bitcoin could have a bright future. This does not only increased BTC’s popularity but also trust in the cryptocurrency. 

That’s not all. Even giant financial institutions are considering bitcoin. PayPal now allows customers to buy, hold, and sell BTC directly from the PayPal accounts. In November, Square also reported that more of its Cash App users are buying BTC more than ever. 

  • Introduction of some financial products

The recent introduction of certain financial products is also contributing to the sudden surge in BTC price. Such products include Bitcoin futures and options, as well as blockchain-related funds. These products have made it much easier for investors who might otherwise have been fearful of volatility to get involved. 

Is This New Rise Yet Another 2017 Bubble?

This is not likely going to be like 2017. One of the reasons for the massive price rise is that there has been a significant influx of investors from large-scale institutions such as university endowment funds, pension schemes, and investment trusts. That was not the case in 2017 when the last bull market happened. 

Then, BTC price rose so high because the crypto ecosystem was dominated by individual retail investors who were only interested in bitcoin because of its scarcity at the time. The bull market was a typical financial bubble and full of investors who were only buying in FOMO (fear of missing out). 

What’s The Future like for Bitcoin; Could It Hit $100,000?

While some people believe the price rise is another bubble, there have also been plenty of very bullish forecasts for what the price of bitcoin will look like by the end of 2021. For instance, Tyler and Cameron Winklevoss, the founders of Gemini, one of the leading crypto exchanges out there, believe bitcoin will eventually hit $500,000 per coin. Also, a Citigroup analyst suggests a price of $318,000 by December 2021.

While these forecasts may look too unrealistic, who could have believed in March 2020 that bitcoin could ever reach $30,000? That sounds impossible at the time. The cryptocurrency has every potential to keep increasing in price, and wherever it goes from here is definitely going to be one of the world’s biggest financial stories in the year ahead. 

Is It Too Late to Invest in Bitcoin?

Bitcoin has continually been reaching new highs since October 2020. Even though it would have been ideal for an investor to have entered the investment space earlier in 2020, that doesn’t mean it is now too late for you to invest in bitcoin. But ensure you invest what you can afford.

There is a high probability of having the price keep increasing, but you should prepare your mind that there could also be dips in its value from time to time. However, even a small investment you make in bitcoin today could return manifold in the long run.

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