Are you thinking of investing in the Bitcoin? Before you test the waters, it may be a good idea to find out about the prospects for this crypto coin in 2021. Reports show that Bitcoin prices have gone up by almost 63% in the last month. There are many theories that seek to justify this price increase while many experts are confident that the trend will remain positive for the future months too.
- One of the theories doing the rounds is that Bitcoin halving will contribute to a positive price trend. This year’s halving is expected to reduce miner’s rewards to 6.25 BTC for every block mined. Bitcoin halving, that typically happens every 4 years, is significant because it has always impacted Bitcoin prices since the halving has a direct impact on Bitcoin supply. As supply comes down, less Bitcoins get released into the market. But if the demand remains the same, then prices of Bitcoins will automatically go up.
- Data on HODLing has revealed that there is an increase in the investors’ confidence in the last few months due to various platforms like bitcoin up platform available in the market. Bitcoin prices are at an all-time high and the prices have not fluctuated. This shows the lack of interest amongst investors in selling Bitcoins. In short, more and more Bitcoin investors are holding onto their coins. When the Bitcoin HODLer net position stays positive it indicates that funds are not being transferred by investors from their wallets to exchanges for selling. Even though prices had dropped in March on many exchanges, it has not shaken investor confidence.
- Institutional investors have also been continuously investing in the Bitcoin. AUM or assets under management at Grayscale Bitcoin Trust have also sharply risen which indicates high demands for Bitcoins amongst institutional investors.
- Besides macro indicators and a positive technical structure, Futures data shows that Bitcoin market has not been overbought. Whenever there have been major corrections in Bitcoin prices, it has been because of surrender of overleveraged buyers. But according to technical analysts, there is enough proof that BTC has not yet been overbought.
- With the May halving of the Bitcoin, analysts had felt that the blockchain hash rate would decline sharply. This was because the amount of Bitcoins mined would reduce by half and revenues of miners would also come down by half. But data reveals that the Bitcoin hash rate managed to recover to almost pre-halving levels. So, the mining industry continues to be healthy and this is a positive trend.
- Bitcoin is also expected to become more user-friendly as transactions become smoother and apps and programs become simpler. While the Bitcoin has still not reached its maximum potential, things are slated to become easier in the future. It is hoped that by 2021 sending BTC will be as simple as swiping a credit card. The Lightning Network is likely to make transactions much faster.
- Every day, more and more emphasis is being placed on Bitcoin safety protocols. This blockchain comprises of hundreds of computers and manipulating the network is practically impossible. Moreover, developers are continuously working to make Bitcoin transactions more private and anonymous.