With the price of bitcoin (BTC) rising by more than 71% (Tuesday 14:00 UTC) since the beginning of this year, a recent analysis points to four factors which have allowed the cryptocurrency to generate a return that beats out every other asset class’ performance.
The primary drivers that have pushed up the price of bitcoin can be summed up in the following manner, according to the analysis by crypto resource news site Bitrawr:
1. Money Printer Go Brrrr
During the previous global crisis that started in 2008, the U.S. Federal Reserve launched a scheme called Quantitative Easing under which it injected some USD 3.9 trillion in the U.S. economy until October 2014.
The “QE policies launched in the wake of the COVID crises are more significant in both scale and scope when compared to the previous rounds,” the analysis stated, adding that this time, the Fed has vowed to inject virtually unlimited funds to kickstart the economy, and move its focus away from Treasury bonds.
Learn more:
Fiat Money Printer ‘Goes BRRR,’ Is It a Time To Sell All Cash For Bitcoin?
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2. Citizens in Emerging Markets Are Fleeing Failing Fiat
The U.S. dollar continues to serve as the dominant currency of the global trade, but many local currencies worldwide are increasingly seen by their countries’ populations as unsafe and wobbly assets, encouraging a move toward crypto. This is particularly observed in countries such as Venezuela and Zimbabwe where hyperinflation is devouring citizens’ savings.
Learn more:
Argentina, Venezuela Seek Crypto-powered Solution to Economic Despair
Washington Warned: Launch Digital Fiat or Say Goodbye to USD Dominance
3. Bitcoin’s Institutional Adoption is Rising, Even Amongst Ex-Haters
Institutional investors are rapidly changing their approach to crypto, as exemplified by the recently revealed list of 20 financial industry players that invested in the Grayscale Bitcoin Trust (GBTC). These include some of the leading mutual funds such as Boston Private Wealth, Ark Investment Management, and Horizon Kinetics, which have more than USD 23bn in aggregate funds.
Learn more:
These Two Institutional Investors Allocated At Least 1% To Bitcoin
Institutional Investors Set for Herd-like Move to BTC, Says Kraken CEO
4. Bitcoin Mining Economics Are Pushing The Network to Efficiency
Bitcoin mining is designed in a way which pushes out inefficient miners, driving the system towards more efficiency and cheap electricity, “constantly adjusting in order to make sure that the network is producing a new block every 10 minutes,” according to the analysis.
“Currently, the entire Bitcoin network is performing 100 exahashes a second, which translates to 1020 hashes, or ‘guesses’, each second,” the analysis stated. “The fact that Bitcoin’s hash rate is so gigantic is not a mathematical curiosity, it is an essential component of the network’s security. To date, the world’s most powerful supercomputer is the Japanese Fugaku, with more than 7 million cores, and a power of 415.53 petaflops. Comparatively, the entire Bitcoin network is 194 thousand times more powerful than Fugaku.”
Learn more:
Here’s How US-China Tensions Might Benefit Bitcoin
Bitcoin Hashrate Falls 25% in 3 Days, Miners Unplug as Floods Hit China
