The Bitcoin reached over the past week, new historical high. The new valuation record was $66,928 on Wednesday, October 20th. The new figure replaced the previous record, which had been US$64,800, on April 14 of this year.
This sequence of highs in 2021 seems to point to the maintenance of an upward trend at the medium-term level, which began in 2019.
High volatility has been a reality in the lives of cryptocurrency investors since the beginning of blockchain history in 2010. The same can also be said of the last three years, during which many international events had an influence on prices.
Since 2019, however, something looks different: there are signs that point to the maturation of the blockchain ecosystem , greater acceptance by the market and the population, consolidation of international policies and reduction of the effect of “fear” — and, therefore, of investment risk.
Below, we list some recent events that demonstrate this observation. This article should not be considered as an investment recommendation or an endorsement of decision making.
This compilation of facts should be taken for informational purposes, and any decision involving personal investments should always be made with prudence and supported by reading from a number of different sources and points of view.
One of the factors that most reverberated in the history of Bitcoin (and cryptocurrencies in general) was the evolution of China’s positioning over the years.
In the early part of the last decade, the country quickly became the world’s center for the development of blockchain technology.
Major investors, brokers and technology developers have flocked to China, corporations have sought to adopt cryptocurrencies as a form of payment, and up to 70% of Bitcoin mining farms have already been housed in Chinese territory.
However, the government’s stance — initially neutral — became gradually more restrictive, culminating in the severe sanctions of 2017 and 2018. The bans imposed on brokerage firms and national crypto-crypto transactions led to the biggest drop in Bitcoin history, in 2018, to which would only start to be reversed after 2020.
The phenomenon was economically catastrophic and made the whole world doubt the future and financial sustainability of cryptocurrencies. But they persisted, and that undeniable weight exerted by China, one of the most powerful economies in the world, seems to no longer exist.
In 2021, China re-established a series of strict regulations and bans, banning Bitcoin farms and outlawing 100% of cryptocurrencies, brokerages and any related individual activities.
These pronouncements, which are the most severe ever made by the Chinese government, took place between April and September. There were momentary drops and fluctuations in the price of cryptocurrencies, but prices recovered quickly, continuing towards the historical highs of the month of October.
Experts agree that the market is no longer afraid of this type of behavior. And the very pragmatic observation of the non-occurrence of downturn effects (such as that of 2018) contributes to further strengthen the positive crypto-economic mindset, consolidate trust in the ecosystem and reduce the impact of future pronouncements of this type — whether by China or from other governments.
While China continues its crusade against cryptocurrencies (possibly seeking to eliminate competition from the digital Yuan ), many institutions and countries are sailing in the opposite direction.
This year, El Salvador became the first country to approve the use of Bitcoin as a legal tender. In Europe, Portugal, Switzerland and Germany continue as the most attractive countries for cryptoinvestors, with practically non-existent taxation. Singapore goes further, with laws to encourage cryptocurrencies. The Asian country works as a regional hub for fintechs.
Many multinational corporations have also exerted positive influences on the Bitcoin quotation, by positioning themselves in favor of the use of cryptocurrencies as a means of payment.
Giants such as Tesla , Microsoft, Apple, Google, PayPal and Verifone were some examples in 2021. Recently it was Walmart’s turn, the largest retail chain in the world. On October 21, Walmart announced the launch of a pilot program through which its customers will be able to purchase Bitcoin at ATMs in some of its US stores.
The company announced that it is developing a strategy to further implement cryptocurrencies in its corporate system. This month we also had the first company to launch a Bitcoin futures ETF on the New York Stock Exchange (NYSE), ProShares. ETFs are “exchange traded funds” or “index funds” in Brazil.
The launch of the new modality of investments in cryptos was considered a success, and contributed to the soaring price of Bitcoin this past week. Since then, two other asset managers have also obtained similar approvals from the US Securities and Exchange Commission ( SEC ), Valkyrie and VanEck.
Restrictive actions, which once had a strong impact on the market, are no longer shown to have significant effects. This is the case with Chinese sanctions throughout the year, in particular the total ban on cryptocurrencies in September.
On the other hand, market acceptance for the use of Bitcoin and other cryptocurrencies as a form of payment or investment channel is growing. These positive actions, such as the launch of Bitcoin ETFs on the NYSE and Bitcoin ATMs on Walmart, demonstrate a great favorable effect on the Bitcoin quotation.
The combination of these factors, observed in 2021, points to greater stability and maturity in the crypto-financial sector, with lower investment risks.