After a sharp fall on Monday morning, the bitcoin exchange rate returned to the area of its historical highs and is ready to continue the upward trend observed since the beginning of this year. Bitcoin has already risen 3.6% to $49,913 in Asian trading on Tuesday.
The growth of bitcoin was facilitated by the wider spread of the cryptocurrency among investors. The latest driver of bitcoin's growth was the purchase of $1.5 billion worth of bitcoins by Tesla. However, the talk about the emergence of new players from Wall Street continues.
The speculativeness of bitcoin and its value are the determining factor that deters many institutional investors from entering the cryptocurrency market. However, it is unlikely that this approach will ever change. Therefore, investors will either have to measure themselves against this, or watch on the sidelines for the movements that occur in the market. Many experts are convinced that bitcoin should stabilize around $50,000 before it begins its new hike to the area of $100,000, which is a longer-term prospect.
The risk that we are waiting for a repeat of 2018, when after another historical high, the bitcoin exchange rate lost more than 70% of its value, is always present. Therefore, when buying a cryptocurrency at the current exchange rate, you need to be prepared for the fact that the exchange rate can return to the area of 25,000, or even 20,000, in just a few months.
Whether other companies will follow Tesla's example is a big question. Many experts doubt that the electric car maker will start a new trend, as there should be a pretty good reason to invest corporate money in such a risky asset as bitcoin. On the other hand, there are companies like MicroStrategy that invest in cryptocurrencies. In his latest statement, CEO Michael Saylor said that Tesla's entry into the world of cryptocurrencies has made bitcoin more attractive to large businesses, which in the future may encourage other companies to explore the demand for this type of asset for investment.
Morgan Stanley is considering investing in cryptocurrencies, but it has not yet reached serious statements. Rumors that Apple will also start accepting cryptocurrency payments are not unfounded. All this supports the bitcoin exchange rate at current levels. But as soon as the enthusiasm runs out, the risk of a larger downward correction will immediately increase. Therefore, interest in bitcoin from major players is necessary.
For example, from the latest such news, we can highlight BNY Mellon, which stated that it has formed a team engaged in the development of a platform for storage and administration and digital assets. Mastercard Inc. plans to allow cardholders to make transactions with certain cryptocurrencies on its network. However, old-timers of the cryptocurrency market may remember that such news was enough in 2018, when the bitcoin exchange rate was falling inexorably. Therefore, the risks are great, but the desire to catch the "outgoing train" of the cryptocurrency market is even higher.
How much do Bitcoin miners earn?
Another problem, which is not as important as it may seem, but requires a solution, is the increase in the cost of transactions, which now amounts to about $20. This is due to the increase in the cost of bitcoin miners' work to maintain the network's operability. According to the Clark Moody Bitcoin platform, bitcoin miners earn 0.97 BTC for just one transaction fee per block. This is the average value for the last 2000 blocks. However, recently, transaction fees have increased quite a lot. They now amount to about $20, which determines a large share of the total remuneration of the miner. Bitcoin miners currently earn a total of about $40 million a day. Thus, the fees alone account for 13.47% of the total revenue of bitcoin miners. This suggests that as Bitcoin mining rewards decline, fees will continue to rise, thereby providing a constant economic incentive for miners to maintain the health and security of the network. But there is also a downside to the coin. The rising transaction costs are sure to scare off smaller investors, as the average commission increases, BTC may become too expensive to use. But there are also those who believe that such a phenomenon is good news. Quantum Economics believes that high fees mean that many players accept bitcoin, as the increase in fees indicates competition among players.
Why will Bitcoin live?
Allianz stated that there are a number of arguments in favor of bitcoin. If earlier there were calls for the reasons for investing in bitcoin: "You don't trust the system - invest in Bitcoin. You are afraid of inflation, depreciation - you invest in bitcoins. Treasury bond yields are too low - add bitcoin in your investment portfolio," now the reasons are different. The main focus is on bitcoin – as a means of payment, as well as a good way to invest. Again, the report focuses on Tesla, as well as several private sector companies that are considering using bitcoin as a form of payment and investment.
Bear in mind that there is another equally interesting moment - when normal ETFs for bitcoin will finally appear. An exchange-traded fund can be an attractive tool for a private investor, but so far there are no such offers. Although there are exchange-traded products that track cryptocurrencies in Europe, US regulators have repeatedly thwarted attempts to introduce them in the US, citing concerns of possible manipulation due to insufficient liquidity. However, after the sharp rise in bitcoin that we have seen recently and the change of leadership at the Securities and Exchange Commission, the prospect of the first bitcoin ETF in the US seems to be becoming more real.
As for the technical picture of bitcoin, everything suggests that in the near future we will achieve a breakthrough of 50,000 and the growth will continue. There has been too much consolidation around the 49,000 level recently. The attempt to form a bear market, which speculators made earlier this week, resulted only in new purchases, which once again confirms the bull market. The technical flag pattern, which is clearly visible on the chart, also indicates a break in the resistance of 49,500, after which the highs at 52,000 and 55,000 for bitcoin open. It will be possible to talk about a bear market after sellers achieve a breakthrough of support for the lower border of the flag in the area of 45,500 per bitcoin. This may cause a more significant deep correction in the area of 37,800 and 33,300. The fact that the constant growth of the bitcoin exchange rate coincides with the bearish divergence that is formed on the MACD indicator also indicates a possible fall in the event of a failed attempt to break through 49,500 in the near future.
