Bitcoin Heads to All-time Highs Amid Regulation and Real Economy
The entry of PayPal into the universe of cryptocurrency transactions augurs the irruption of fresh money in bitcoin.
Bitcoin accelerates towards the all-time highs it marked three years ago. The vertical rise of 8% this Wednesday brings closer the reconquest of those, still distant, 19,900 dollars. A level to which the cryptocurrency aspires to return to the stroke of regulation for the sector and its progressive adoption as a payment method.
The advances that have been taking place in these two areas in recent months are for industry analysts a clear engine in bringing cryptocurrencies closer to the real economy. On the one hand, they are endowed with greater legal certainty and transparency. On the other, they acquire a utility that has been less explored until now and that leads them towards an increasingly daily use.
The combination of these two factors, according to the experts consulted, is facilitating the arrival of a volume of investors and investment that would otherwise have remained in liquidity or destined to other more traditional assets. “Many are encouraged to go from watching the bulls from the sidelines to jumping into the ring,” says a market operator.
New investors
Bitpanda founder and CEO Eric Demuth notes that bitcoin’s recent upward trajectory is nothing more than the most obvious symptom that “cryptocurrencies have begun to establish themselves as a trusted asset class for the global financial market.” . “The‘ crypto ’are here to stay,” he declared in a statement to Invertia. Something that, according to corroboration, has resulted in “a huge influx of institutional capital and a record number of new new retail customers.”
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A trajectory that came from afar but that the recent efforts of the European Union and several member countries -including Spain- to establish clear rules of the game as well as the step forward of PayPal to offer services in cryptocurrencies to the users of its tools of digital payments have accelerated strongly. A disruptive advance, which according to Demuth, will be just the beginning because “we will see more great players join the party in 2021.”
“We have left the Old Wild West behind,” says Javier Molina, spokesperson in Spain for the eToro broker, referring to these decisive advances for greater dissemination and transparency of ‘cryptos’. An affirmation with the majority of the industry, which sees in these initiatives an “unstoppable” growth potential.
The step to the front of PayPal is especially decisive in this assault of the bitcoin to its historical maximums, since it is the first great digital payment platform that considers accepting several cryptocurrencies for its transactions. Although at the moment it will only allow its users the sale and storage of four digital currencies -bitcoin, ethereum, bitcoin cash and litecoin-, the door is open and the intention of the company is to be able to cross it throughout 2021.
Buy in bitcoin
In this sense, the possibility that its more than 300 million users can purchase products or services from the more than 26 million establishments that use its services becomes an unparalleled runway for its irruption into the real economy. In this sense, bitcoin remains primarily a safe haven for the storage of value and a speculative investment tool rather than a means of payment.
Here it is worth mentioning that many cryptocurrency projects around the world are working hand in hand to obtain debit cards charged to digital wallets and a greater dissemination of their payment applications with automatic conversion to fiat currency. And yet they do not finish curdling.
Technical analysis
In the first case, the reluctance of the card giants to enter a sector in which until now there was little or no regulation is holding back many initiatives. In the second, the commissions that are applied in the exchange and its possible fiscal effects are limiting its diffusion, especially in more or less daily payments.
With this impulse, which “cancels the two main criticisms that the sector received”, the analyst Joaquín Robles, from XTB, points out that, “once the barrier of $ 13,000 was overcome, a new impulse towards the next resistance in the $ 13,800 ”. From there, the assault on highs would still be at 44%, but the flashbacks would not go off, according to the charts he handles, as long as prices remain above $ 10,500.
The section to be conquered seems high, but Molina stresses that “that is the objective of the investors who are now entering bitcoin.” A goal for which, in addition, it has the indirect support of the central banks, which with their flood of liquidity in fiat currency -especially dollars and euros- make their corresponding currencies attractive as a refuge while they have openly opened in their bosom the debate on the issuance of digital currencies.
And all this while confinement measures proliferate in large economies as the only method of containment to curb the scope of the coronavirus pandemic in the worst hit regions. An appropriate initiative from a health point of view but detrimental to the economy and that, as was demonstrated in spring, predisposes the population to the search for new investment alternatives.
Halving effect
If progress is achieved to $ 20,000 per bitcoin, which in December 2017 came to be seen at times on some Korean trading platforms, the queen cryptocurrency would mark a revaluation of 177% in this year of the pandemic. A percentage that makes more blood of the sad behavior of assets such as those referenced to the Ibex 35, which has lost 29% since January, and even before gold that rises 24% in the same period.
Volatility remains the Achilles heel for bitcoin to achieve this feat in the medium term. However, this year has an added boost factor. And it is that last May 18 one of the ‘halving’ took place that cut the rate of issuance of new units and that historically have contributed significantly to their revaluation.
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