In today’s crypto daily news, we can observe a sleepy bitcoin ride. Its price has already dropped to $37,000. The rocketing rise in the most famous cryptocurrency cost is an anomaly that does not occur very often in the markets. Therefore, we should think about what is behind bitcoin’s success and how its story can develop further.
Crypto Daily: Bitcoin’s price is rising more than expected
For bitcoin, as for other assets, the economic policy of central institutions is essential. Central banks’ monetary policy is exceptionally relaxed almost worldwide. This due to the coronavirus pandemic. Most governments’ budgetary policies can be described as wasteful. They do not take much account of debt growth. This combination leads to a massive influx of money into the markets. It causes a sharp rise in asset prices.
Of course, the vast majority of money flows into proven assets. Such as stocks, bonds, or real estate. Therefore, even in a crisis, we can observe that various investments are reaching new price peaks. From investors’ point of view, many types of assets may already seem overpriced. Therefore, multiple alternatives a now have a new chance. Art, rare cars, and cryptocurrencies are becoming popular. Read the latest Crypto Daily news, and stay up to date.
What about large investors?
Of course, large investors do not enter the world of cryptocurrencies, with virtual currencies becoming an essential part of their portfolios. However, many of them devote a small amount of their portfolio to cryptocurrencies. But even small pieces of large portfolios mean a massive influx of new money for cryptocurrencies. This is not responded to by an adequate increase in the supply of critical cryptocurrencies on the market, mainly because they are programmed in a deflationary manner. This, of course, must manifest itself in the only possible way, that is, a massive price rise.
When the price in the crypto markets rises daily, sharply, and for a long time, the so-called FoMO effect (Fear of Missing Out) begins to manifest itself in many non-invested people. It creates fear in people that they will miss a unique opportunity in the market. The fear then turns into frantic shopping, which leads to further price increases. This strengthens the FoMO effect when it tramples on others until more restrained individuals gradually jump into an ever-faster train.
The question remains. Whether the derailed train will eventually derail again, as it has already done once at the turn of 2017 and 2018. The derailment was reflected in a massive drop in cryptocurrency prices. This has led to high losses for many investors who have jumped on the bandwagon too late. This time we can witness a similar scenario. Nevertheless, it can be concluded that even after a possible fall in cryptocurrencies, they will have a significantly higher price than in the period from mid-2018 to mid-2020.