By
Godfrey Benjamin
April 20th, 2024
Bitcoin price has just hit $20,000 for the first time ever as investor popularity continues to surge for the world’s most highly-demanded cryptocurrency.
The price of Bitcoin has surged past the $20,000 barrier for the first time in its history, according to the CoinMarketCap website. The historic milestone comes just over two weeks after breaking its previous all-time high. Bitcoin’s price has increased by nearly 7% over the past 24 hours and is now trading at $20,607.
Bitcoin has gained more than 170% this year, pushed by demand from institutional investors attracted to its potential for quick gains and purported resistance to rising USD inflation.
Is this rally similar to the one that we observed in 2017? Definitely not, as there are other factors that influence the current Bitcoin market. This time, among these factors we can highlight the increasing demand from teh side of institutional investors, the growing adoption of the coin as well as the appearance of understanding that Bitcoin can function as a reliable store of value.
Top Factors that Influence Bitcoin Price
Three years ago, Bitcoin attracted retail investors only, among them there were a lot of young enthusiasts who were captured with the idea of changing the world with new currencies. Today the situation has changed. Now institutional investors have joined the game and now mainly this group fuels the rally.
Institutional investors do not perceive Bitcoin as an asset for short-term strategies. They view BTC as an alternative to gold and a new store of value. A good example of such a newcomer in the game that is actively advancing with its journey is MicroStrategy. This US-based company has already invested an impressive sum in Bitcoin and is not going to stop. So, yes, it’s a bright example to demonstrate the current trends and a good example for many other companies to follow.
Market Situation
Earlier today Bitcoin (BTC) has overcome another of its biggest price hurdles this month by breaking past the $19,500 resistance level, a feat analysts believe is capable of sending Bitcoin into the uncharted price territories above $20,000 and more. BTC has been trading well below the $19,500 benchmark since the first-ever digital currency recorded its all-time high of $19,892 according to an earlier report by Coinspeaker.
This new rally has been attributed to renewed buying activity around Bitcoin as well as other economic news emanating from the United States. There are potential talks that the long-awaited Coronavirus stimulus deal in the U.S will be reached within the next 24 hours according to Politico’s Jake Sherman.
The potential stimulus deal might have incited the market bulls to renew their Bitcoin buying activity in anticipation of a fall in the Dollar Index. Coindesk reported that French multinational investment bank and financial services company Societe Generale SA (EPA: GLE) on the backdrop of the falling United States Dollar projects a further 5% dip for the Dollar Index (DXY) in 2021, and even more falls in subsequent years. The French investment bank is not alone in the bearish forecast for the U.S dollar, the trio of Morgan Stanley (NYSE: MS), JPMorgan Chase & Co (NYSE: JPM), and Goldman Sachs Group Inc (NYSE: GS) also forecasts a decline in the dollar in the coming year.
Current data from the Dollar Index, a benchmark for comparing the value of the currency against other major currencies shows that the value is at a 32-Month low at 90.20. This Dollar decline was the underlying reason why firms like MicroStrategy Incorporated (NASDAQ: MSTR) took Bitcoin as the underlying hedge fund asset for its Treasury Reserve Policy, and why new investors may also stock up on the coin.
The very first stimulus checks that were issued in the second and third quarter of this year saw many Americans investing theirs into buying Bitcoin (BTC). There are also indications that this pattern may repeat itself should households lay their hands on the stimulus checks.
While the mass buying action of the institutional investors has a more emphatic influence on the price of Bitcoin, the almost negligible role of retail investors using their stimulus packages to purchase BTC may also contribute to the attempt for the coin to hit its ambitious all-time high price before the end of the year.