1. Institutional Investors
Several financial institutions have purchased Bitcoin over the past few years—either directly or indirectly.
Grayscale’s Bitcoin Trust has become exceedingly popular, with over $9 billion of BTC shared by 29 investors. Furthermore, institutional investors are buying Bitcoin futures contracts through other investment platforms like the Chicago Mercantile Exchange (CME) and Bakkt.
Several other popular investment vehicles also exist.
2. PayPal Adoption
Payment processing giant PayPal introduced cryptocurrency buying and selling for all customers in October 2020. That announcement instantly gave 350 million users access to the crypto market.
Though PayPal has not said exactly how many of its customers have purchased crypto, it has rapidly raised purchase limits. This implies that initial purchases exceeded the level of demand that was anticipated.
3. Miner Halvings
In May 2020, Bitcoin cut its block rewards in half, thereby discouraging Bitcoin mining. This, in turn, reduced the growth of the Bitcoin supply, drove down inflation, and drove up demand for Bitcoin that already exists.
Past halvings have had a positive effect on Bitcoin prices, and this year’s halving has likely been beneficial to Bitcoin prices as well.
4. Corporate Purchases
Several private companies and corporations purchased Bitcoin this year as a supplement to their other investments. Notably, Square invested $50 million in Bitcoin this year, while MicroStrategy invested $425 million.
According to BitcoinTreasuries.org, about two dozen companies hold about $15 billion of crypto in total, equivalent to 4% of the Bitcoin supply.
5. Uncertain Times
Economic damage resulting from the response to the COVID-19 pandemic has harmed mainstream markets. General political turmoil and fiat currency inflation have also caused large-scale uncertainty.
Those issues could be driving investors to buy alternative assets like Bitcoin as a store of value. Though Bitcoin prices remain volatile, Bitcoin prices only need to be more stable than the alternative to be an appealing investment.
If these trends continue, Bitcoin will likely remain in high demand for some time, even throughout intermittent price fluctuations.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.