As recently as five years ago, many who invested in cryptocurrency may have been seen as ’unreasonable’ or unduly lavish with funds. Recent trends have, however, proven that perception wrong. As of January 2016, the total market cap of cryptocurrencies was shy of 18 Billion USD with Bitcoin (BTC), the primary driver of the market volume at 6 billion dollars with a per-unit price of 430 USD.
Between 2016 and 2017, crypto prices rallied up to over 560 billion USD, recording over a 3000 per cent increase. BTC, on the other hand, scaled from 900 dollars to a whopping 20,000 dollars per unit price, reaching an all-time high of 63,000 USD in April 2021.
BTC isn’t the only crypto that has experienced a surge in recent times. The past few years have seen a rise in altcoins such as Ethereum (ETH), Ripple (XRP), and in recent times, Dogecoin(DOGE) with a market cap of 50 billion USD.
As more multinational corporations and institutions adopt BTC and its derivatives as an accepted means of exchange, it is vital for the average human to educate themselves about cryptocurrencies on such websites as Learncrypto to keep up with recent economic trends. Also, experts have forecasted that the price of BTC will reach 400,000 USD before the end of 2021.
Why Are Cryptocurrencies Rallying?
Ever wondered why a volatile and unregulated means of exchange built on a decentralised forum would be embraced by both individuals and organisations? Although these virtual currencies give the assurance and security of being impossible to counterfeit, it is still rattled with other insecurities and caveats.
These aversions have not prevented investors and traders from opting for bitcoin and other altcoins, as recent statistics show. So, why does it continue to rally?
● Growing Popularity as an exchange medium: It is more convenient to trade online with crypto since it does not draw a border across nationalities. As more organisationspermit payments with cryptocurrencies, it becomes essential to convert national legal tenders to crypto for ease of transaction.
● The Fear of Missing Out: More and more investors want to partake of the massive gains in the goldmine of crypto. BTC, for instance, witnessed over a 2000% increase between 2016 and 2017. Investors who didn’t purchase it before the rise would not want to be left behind in the proposed future rise in the value of the BTC.
● The Herd Mentality: As cryptocurrencies gain popularity, it is natural with human nature to identify with what is popular and produces results.
● Influencers influence: The Dogecoin, which was created as a joke, became a big deal after Elon Musk’s tweet and has risen to the top 10. The same Tesla CEO changed his Twitter bio to #Bitcoin, and the digital currency rose by 600 USD in a few hours.
Impact on the Global Economy
There is a good reason why investors continue to embrace bitcoin and other altcoins as an investment and trade option. Cryptocurrencies have displayed utilitarian qualities that propose a better alternative to traditional financial techniques.
Impact on Entrepreneurs in Developing Countries
Blockchain and cryptocurrency enable easy transactions across different fiat currencies. The advent of BitPesa and the likes have made provision for stress-free intercontinental transitions for African entrepreneurs. These companies allow entrepreneurs to receive payments in crypto and change to fiat currencies for other business needs.
This provision reduces the exchange process from one local currency to another, which is more accepted, such as the USD, and reconversion to the desired local fiat currency. With cryptocurrencies, business is easier to transact and proceeds easier to receive.
Decreased Fraudulent Transactions
Cryptocurrencies have the benefit of being automated and secured by cryptography. This makes it impossible to duplicate or spend twice. This essential feature diminishes the risk of corruption and other fraudulent transactions that are possible with fiat currencies.
Impact on the Stock Market
Crypto has been reported to influence the stock market. As a leading indicator for a nation’s future economic status, the stock market gives insight into an economy’s potential growth. Therefore, as crypto value continues to rise, the stock price will experience a trajectory increase. This, in turn, is a healthy foreboding for future economic growth.
Cryptocurrencies, although volatile and unsecured, have become widely accepted means of trade. The growing popularity and influencers’ actions have contributed to its recent rally. Aside from the insecurities and risk with crypto investments, it has proven to offer better opportunities to businesses and investors. The sprout it presently experiences could advance the global economy.