Bitcoin has seen a significant rallying value over the past few months, with a monumental spike over the past weeks of trading. With an over 80% increase in price over the past two months, the cryptocurrency has managed to crack the front page of massive financial media The Wall Street Journal’s latest edition.
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The report from the media house indicates that Bitcoin is nearing the record high from 2017’s bull rally as it is “driven by new buyers“. With the attention of ‘Wall Street billionaires’ such as Paul Tudor Jones and Stanley Druckenmiller, Bitcoin has been picking up mainstream attention once more.
What is driving Bitcoin price?
One of the major differences between this surge and the famed rally in 2017 is in who is investing in Bitcoin. In 2017, the attention to the token came from retail investors who bought in before it peaked to make a profit. This rally, however, seems to be pointing towards a mass wave from institutional investors. With hedge managers such as Grayscale Investment and Square, Bitcoin price is gaining healthy investment opportunities which are backed by firm support.
While institutions appear to be the leading factors in Bitcoin price, another key difference lies within the regulation and the retail opportunities. With PayPal’s launch for cryptocurrency support, buying Bitcoin is both perceived as safer and more convenient for first investors who might have been cautious of exchanges.
WSJ’s report indicates that the volume of Bitcoin on Square’s Cash App in 2019 was $555 million USD compared to the whopping $1.6 billion USD in the third quarter of this year alone. With more retail investors entering the market with bigger purchases, the demand for Bitcoin has increased rapidly, resulting in a quick price hike as a result of the capped supply.
Digital currency to replace traditional paper money
Concerns about hygeine in paper money have been trajected by the global pandemic; highlighting the need for contactless payment systems. While Bitcoin, and other digital assets offer a solution to this, there is a perception that the token is an investment still rather than a transactional currency. In response to this, PayPal CEO Dan Shulman commented saying that there will be shift as paper money disappears and digital transactions increase. During an appearance on CNBC, he noted:
“As paper money slowly dissipates and disappears from how people are using transactions, central banks especially on the retail side will need to replace paper money with forms of digital fiat currency.”