Bitcoin price explosion: is there more to it than just PayPal?
Bitcoin is on everyone’s lips again. The crypto reserve currency has had an impressive rally and made it onto the front pages of the major newspaper publishers. It is not uncommon to read that it could be a bubble. Whether it is really a bubble, what reasons are to be given for the Bitcoin price increase and why this week the European Central Bank (ECB) created new planning security for crypto investors.
Bitcoin price (BTC) has rallied in recent days reminiscent of the crypto bubble from late 2017
How enormous the price increases are can be seen with a view to the previous year 2020. If we started at around 7,200 US dollars in January, Bitcoin, like all other assets, had to take a hard hit from the Corona crash. At the annual low in mid-March, the Bitcoin price was quoted at just 4,600 US dollars. The fact that it then gradually worked its way up to 11,000 US dollars by the beginning of October could already be seen as a great success. Now, just a month and a half later, the Bitcoin price is trading at over $ 18,000. For this month alone, the plus is over 60 percent.
In addition to technical chart indicators, one may wonder which factors provide support for such a meteoric rise. One can come to the conclusion that it is more a long overdue catch-up effect than unsustainable hype.
PayPal: When rumors become reality
With the announcement of PayPal The current Bitcoin rally has started on October 21st, to also offer Bitcoin transactions and buy Bitcoin. Last week, on November 12th, it was also activated for the American market. The fact that now of the 346 million active PayPal users, most of whom live in the USA, the Bitcoin purchase is only a click away, can be seen as clearly positive for the Bitcoin exchange rate. PayPal makes it particularly easy for people without a crypto affinity to invest in crypto currencies.
Not much less than the fundamental demand generated by the PayPal service should be the signaling effect for the market. It is becoming increasingly difficult to see Bitcoin as an insignificant niche. At the same time, there is increasing pressure on financial companies to also offer crypto services in a timely manner in order not to fall behind.
External impact 2.0: From US senator to company board
In particular, the public perception of Bitcoin has changed significantly in recent months. With the increasing discrediting of our fiat money system through massive expansion of the money supply, even public figures – without any pressure to justify themselves – can admit that they see Bitcoin as a good store of value.
So has the newly elected US senator for the state of Wyoming, Cynthia Lummis, public television for the benefits of Bitcoin as a store of pronounced and at the same missed the inflationary dollars a swipe. Such statements by an elected US Senator would have been declared dubious and unpatriotic a few months ago. In the meantime, this picture is changing, since you have to justify yourself, especially in the free economy, if you think Bitcoin is nonsensical. In the financial sector in particular, you have to explain yourself if you ignore Bitcoin as an asset.
This new narrative is generated by companies such as Microstrategy or Square, which are publicly celebrated for exchanging part of their US dollar reserves for Bitcoin – less from speculation, but from a lack of trust in the domestic fiat currency. This signal effect, in turn, carries over to all types of investors. Starting with small private investors to the richest people in the world and their asset managers who want to diversify their portfolio