Bitcoin has been on a good run, hitting a range of $9,300 to $10,000 on each day’s chart, causing a $22.41 billion surge in market value for the entire cryptocurrency market, according to data from Coindesk.
The entire cryptocurrency market is worth a combined $277 billion as at this morning, data from CoinMarketCap shows.
The top three cryptocurrencies ranked by market value are Bitcoin, worth $179.48 billion; Ethereum, worth $27.18 billion; and Tether, worth $9.19 billion.
Although, the day-by-day chart suggests a loss in momentum, however, the uptrend is sitting pretty intact above $9,300.
Bitcoin at the moment is going through an important market barrier at $10,000 above which it might considerably find its footing.
What exactly are the reasons for the Crypto market sporadic growth, with a $22.7 billion volume per day?
There are three major reasons for this growth:
1. The recent bitcoin halving.
Bitcoin was halved for the third time on the 11th of May 2020. Previous, miners were rewarded with 12.5 new coins per block mined. However, from May 12, that 12.5 new reward was halved to 6.25 new bitcoin, limiting the future supply coming into the market.
Basically, the supply-demand principles suggest that a reduction in supply results in an increase in price. Previous halving events were preceded with a sharp rally in bitcoin as anticipation of the event grew.
In 2012, new bitcoin rewards to miners were halved from 50 to 25, and in 2016, they were halved again from 25 to 12.5. The latest halving was from 12.5 to 6.25 coins per block. Its halving occurs every four years.
A coin halving event is when the reward for mining the coin transactions is cut in half. This event also cuts in half its inflation rate and the rate at which its new coin enters circulation.
2. Institutional investors are starting to use bitcoin as financial instruments.
Institutional investors are now channeling their investment portfolios to Bitcoin. This use to be a scenario talked up by bullish crypto investors, but institutional investors and hedge funds around the world have been rushing to have stakes in crypto assets which have been outperforming other financial assets since Q1 and Q2 of 2020.
3. Bitcoin acting as a hedge against inflation.
Investors are protecting their assets against inflation. There is a growing belief that bitcoin will act as a hedge against inflation.
Governments can print an unlimited amount of money for various fiscal and monetary policies, unlike Bitcoin. Similar to physical gold, its supply is fixed. The supply of bitcoin is fixed at 21 million coins.
It is estimated that of the 21 million total coins, 18 million have been mined already. Investors see it as a way of mitigating the economic damage caused by the coronavirus pandemic.
Ethereum is the second-largest cryptocurrency platform by market capitalization, behind Bitcoin. It has a market capitalization of $27.18 billion and currently priced at $244.20.
More so, ethereum is a decentralized open-source blockchain featuring smart contract functionality. Ether is the cryptocurrency generated by Ethereum miners as a reward for computations performed to secure the blockchain.
Ethereum is exhibiting optimistic indicators, and going through a serious resistance close to the $250 degree.