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Reasons for the recent rise in the price of Bitcoin (BTC)

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In the last 20 days, bitcoin price has risen by about 30%.

In fact, it has reached peaks that were not seen since January 2018, that is, since the burst of the speculative bubble at the end of 2017.

In fact, already in the middle of last year, when Facebook announced the Libra project, the price exceeded $ 13,000, but it did so for a very short time, without being able to reach $ 14,000.

So what's different now compared to back then?

Most likely the main difference is the May 2020 halving, which has actually reduced the BTC being brought to the market with each block.

It is worth noting that bitcoin mining has very high costs that very often have to be paid for in fiat currency. This means that a large proportion of the new BTC collected through mining has to be sold relatively quickly to finance mining.

Furthermore, after the miners' reward was cut in half, the hashrate paradoxically increased over the months, increasing the costs of mining itself.

In May, along with the halving, it hit a new record, only to retreat and climb again, setting an even higher record in mid-October.

However, given that mined BTC is half that of the beginning of the year, the market supply since May has probably been declining in the medium term.

Bitcoin price growth in October 2020

But why did the most significant increase occur at from October 8?

In fact, throughout 2020 it had fluctuated roughly around $ 10,000, with a peak of more than $ 12,000 in August, but only in October, did it break the wall of $ 13,000.

The main triggering event was almost certainly the PayPal announcement. Even though the hypothesis had already been raised in June, and even though the price had already risen above $ 11,000 even before the final announcement, the momentum to $ 13,000 was most likely coming from there. But there are also other events behind that + 30% for 20 days.

The ongoing purchase of bitcoin on the market by listed companies like MicroStrategy, which use it as a store of value, no doubt played a role as well.

However, it must be said that this is a phenomenon that started in August when the price of BTC first tried to break the wall of $ 13,000 without success.

According to some, the increase in recent weeks may have been affected by the upcoming US presidential election, although there are different views on how this may have played a role.

However, there may also be some temporary inverse correlation with the US equity markets and, in particular, with the Nasdaq index, which has been falling on average since October 12. From this point of view, no evidence has yet emerged to clarify and clarify what inverse correlation could be.

The truth, however, is that during the second halving of 2020 in particular, more and more financial institutions, including banks, seem to stop being hostile towards Bitcoin and take it more and more seriously.

At a time when less BTC was introduced to the market, due to halving, this may have prevented a drop in demand of the same magnitude.



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