Even though Bitcoin has been part of the crypto market for over a decade, it has recently attracted fresh attention due to the Bitcoin bull run, they had many record-breaking moments throughout 2020, but the best price was yet to come in 2021.
More specifically, Bitcoin has reached a price of $50,000 in February 2021. This has prompted discussion about the price of Bitcoin, its newfound status as a safe haven asset, and the predictions about its future. If you’re a new investor or you want to invest in BTC in the long-run, we have compiled a list of important predictions, as well as factors that you need to have in consideration when you’re making your decision.
What Affects the Price?
The price of Bitcoin is derived from the interaction of supply and demand on the market. You might expect financial institutions like the central bank to control the supply of BTC, but this is a decentralized cryptocurrency that was designed to operate without this kind of control.
Hence, the creator of Bitcoin programmed the blockchain network to regulate the supply without any external interference. The protocol is designed to increase the difficulty of mining when there is an increase in the number of miners, or in other words, when the collective computing power of the blockchain network increases.
Because mining is the only process through which new BTC are added to the network, this protocol slows down the pace at which new BTC are discovered. Furthermore, another event is programmed to occur when 210,000 BTC are mined, it is called Bitcoin halving, and it halves the rewards of the miners, which makes the mining process less cost-effective. For example, the block reward was in 2009, 50 BTC, and in 2020 is 6.25 BTC. Overall, the supply that is available is smaller than the demand, and this is why the price of Bitcoin is also growing.
But, because Bitcoin is easily accessible online, you can buy BTC on any exchange site; this also increases the demand. One reputable trading site is bitcoin circuit. The trading site is powered by AI technology which means you don’t have to spend hours on the site because it is automated software that performs the trading for you. Additionally, there is a demo account that you can access, along with easy instructions to help you set up your account.
The Price Predictions
Moreover, as Bitcoin operates in a smaller market compared to the financial markets of the traditional currencies, some events and huge investments by institutional investors also move the demand for BTC.
One example is the investment of $1.5 billion BTC of Tesla. This definitely prompted the increase of the price of Bitcoin in February. Some predictions before the support of Tesla included a price of $50,000 in 2030.
But other experts feel that this is something that is realistically achievable by the end of this year. Even more so, if more institutional investors support Bitcoin, some supports expect that the price will hit $100,000 by 2050. Other supporters have even more optimistic predictions than they feel that Bitcoin is going to reach $325,000 in 2030.
Either way, the future of Bitcoin depends on multiple factors that we mentioned earlier, including the interest of retail and institutional investors. But as corporations like Tesla, Square, Microsoft, PayPal, are supporting Bitcoin and are accepting Bitcoin payments, we can expect in the future the price of Bitcoin to rise. It’s also worth mentioning that one of the reasons why institutional investors are buying Bitcoin is that they are treating it as a good store of value because the overall supply of BTC is restricted to 21 million.