Digital currencies, particularly Bitcoin have become some of the most talked about, speculative, and controversial investment vehicles today. While on the one hand, the blockchain powered industry is providing opportunities that many are taking advantage of and profiting from – on the other hand, there are more ponzi and fraud schemes wreaking havoc online, resulting in great losses for unsuspecting wealth aspirants.
That aside, it’s hard to deny the fact that digital currency entrepreneurs make up the fastest growing pool of millionaires and billionaires in the world today. The blockchain domain is dubbed by many internet 2.0 so much like we’ve witnessed the rise of giants such as Google, Facebook and Amazon from the dot com era, the new wave of innovators will likely come this new burgeoning space.
The rise of bitcoin has sparked a lot of debate. Some pundits of economic theory are proponents while others completely abhor it. You have young, successful entrepreneurs like Chamath Palihapitiya who firmly believe that bitcoin prices will surge even higher than current levels as more investors seek an ‘uncorrelated hedge‘ against untrustworthy national leaders. Then you have the more seasoned traditional investors such as Charlie Munger of Berkshire Hathaway on record blatantly stating that they “hate the bitcoin success.”
Since the $1.5 billion bitcoin purchase by Tesla, the crypto market has been on a wild throttle, hitting more highs and reaching a higher market cap. The surge in bitcoin is one of the most significant surges in digital currencies. Bitcoin is highly volatile, and it has been experiencing fluctuation in price for a long time. The volatility is one of the reasons why many people have been hesitating to invest or buy bitcoin.
Investors that invested in stocks prior to last year have seen some made gains, but bitcoin is one of the few investments that has performed even better than stocks. Since the stock market bottomed in March 2020, cryptocurrencies like bitcoin have seen a steady rise in price and interest as some investors seek new avenues from which to get returns on their capital especially as interest rates on savings remain relatively low in the current climate. Now, let’s dive into how bitcoin has been performing since 2020 to date and why arguably you should have bought some bitcoin from a crypto exchange or p2p platform.
Did COVID-19 affect Bitcoin price?
Bitcoin experienced a significant surge in 2020 and this could be attributed to several factors. Many investors were very much concerned about the long-term adverse effect of the trillions of dollars from the federal stimulus that many people pumped into bitcoin. Additionally, many of the young Americans that got the three rounds of the direct stimulus also pumped in huge amounts into bitcoin.
At the beginning of 2020, the BTC/USD pair was traded around $7.2k but reached $10k by mid-February. In 2021, bitcoin has outpaced almost any other type of investment. It has increased by about 63% in 2021, after the value went up 4x in 2020.
What other factors could be influencing bitcoin’s rise in price?
The recent surge in the price of bitcoin could be attributable to the high-profile support it has received recently. The news of South African-born Tesla CEO, Elon Musk buying $1.5 billion of bitcoin certainly gave the digital asset the validation it needed in many people’s eyes. Tesla also added that bitcoin will now be accepted as a mode of payment for their products. Earlier this year, the Bank of New York Mellon said the growth in demand for digital assets would make them provide custody services. Mastercard has also offered support.
Despite the high volatility of bitcoin, bitcoin bulls are optimistic about more returns on digital assets. The CEO of Galaxy Digital, Mike Novogratz, anticipated that bitcoin would trade at $55k to $60k at the end of 2021. His projections manifested because bitcoin is trading above $55k already.
How much would you have gained had you bought bitcoin last year?
The price of bitcoin (BTC) as of April 2020 was around $7.2k. This means if you bought 1BTC in the second quarter of 2020, below is what your investment return chart or data will look like.
April 8, 2020: 1 BTC was selling at $7294, and it fell drastically the next day to a low price of around $6876.
May 13, 2020: In less than a month, the price of BTC went up, and 1BTC was selling at $9739. The price range was maintained over the month. This means if you invested $7294 in BTC in April, you would have gained over $2k.
June 9, 2020: Bitcoin didn’t have a highly significant run between May and June. Bitcoin was selling at around $9891. This means the price difference between May 13 and June 9 was less than $300. But overall, your bitcoin gains would have been above $2.5k.
July 8, 2020: Bitcoin experienced a price fall and was selling around $9238. This fall might be discouraging for investors with short plans or strategies. However, any investor that bought 1BTC at $7.2k in April and is pulling out in July would have still realised huge profits.
August 12, 2020: Any patient investor that didn’t pull out when the price of bitcoin fell between June and July would have been pleased in August when bitcoin was trading at around $11,790.
December 30, 2020: The year 2020 closed on a bright and impressive note as bitcoin hit $31000.
January 8, 2021: It didn’t take long before bitcoin gained more ground, and the price went up to over $40k. Any investor that invested in bitcoin as of April 8, 2020, would have made a gain of over 500% in the investment.
February 20, 2021: Bitcoin didn’t stop the bullish run and was trading for over $57K before the end of February. The leading cryptocurrency reached another all-time high within the month. This means if you had decided to buy bitcoin as of April 2020, when it was trading at above $7k, your bitcoin would be worth over $57k. Literally, you’d have earned approximately $50K from your initial investment.
April 5, 2021: It is right to call bitcoin the calm before the storm. This means in just 365 days; Bitcoin rose to over $60k. Had you invested $7.5k in April 2020, that capital would be worth upwards of $55k today. That’s about 800% ROI. The surge over the last year has been incredible.
If you do not own any amount of bitcoin by now, it’s not too late. Digital currencies are here to stay. Some analysts even predict bitcoin’s price could potentially go up even higher than where it is today. However, crypto markets are erratic and volatile, it is imperative that you do proper due diligence and risk management should you consider buying bitcoin. There are several exchanges where you can safely buy Bitcoin in South Africa.