With the advent of Bitcoin, a lot of new cryptocurrencies flooded the crypto market. Today it’s estimated that there are over 2,000 digital cryptocurrencies, and of course, as more people and businesses want to invest in cryptocurrencies, the number will likely rise in the future.
But, why exactly are cryptocurrencies gaining traction in 2021? In this article, we explore the reasons for the rise of cryptocurrencies in 2021.
The Bitcoin Bullish Cycle
Bitcoin is on a bull run since 2020, mainly driven by the Bitcoin halving, and the price increased in the following months. In fact, Bitcoin’s price currency rose by about 170% in 2020, and it broke its first record in December with an all-time high of over $20,000. It’s one of the longest bull runs in Bitcoin’s history, and it continued in 2021 when Bitcoin broke $40,000.
Everything from the Bitcoin halving as an event to the subsequent rise of the price was well-covered in the media, and it’s very understandable that a lot of people were looking to invest in Bitcoin. But, it’s equally important to do your own research and learn more about the crypto-world from a reliable site like learncrypto.com that offers easy-to-understand information on many topics.
Furthermore, the bull cycle of Bitcoin was also evident in other digital cryptocurrencies. As a result, their prices also are on an upward trend. Actually, prices of cryptocurrencies like Ether, Litecoin, and Bitcoin Cash, also surged during this period. The price of Ether, for example, went over $1,000 in January 2021. So, definitely, the bullish cycle of Bitcoin has attracted a lot of attention from investors that want to add Bitcoin and maybe other cryptocurrencies to their portfolios.
Safe and Fast Transactions
Blockchain technology is the innovation that actually enabled the rise of cryptocurrencies and the very existence of the crypto market. Blockchain technology is defined as a digital distributed ledger of transactions that are recorded across a network of thousands of computers across the world.
The critical reason why blockchain technology is successful is that it is a peer-to-peer network, which operates thanks to its users, without the interference of separate institutions and authorities.
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So, control or alteration of the data on the network is virtually impossible. When it comes to the processing time of transactions, on average, they take up to 10 minutes for BTC. However, there are differences based on the conditions of the network.
Furthermore, the transaction fees are quite low, and this is another reason why cryptocurrencies are increasingly popular today. So, this means that cross-border transactions, for example, are completed quickly, and you won’t be charged high fees for the transactions.
On top of these advantages, owners of cryptocurrencies enjoy another advantage, which is anonymity. Increased privacy is an important factor in the interconnected world, and it’s definitely another reason why people want to invest in crypto.
Safe Haven Investments
A blockchain network isn’t controlled by third parties like financial institutions. Hence it isn’t influenced by a monetary policy. Actually, they aren’t directly influenced by economic crises or political unrest. This is why a lot of people treat Bitcoin and other cryptocurrencies as safe-haven assets.
Still, always keep in mind that Bitcoin and other cryptocurrencies are affected by the ratio of supply and demand and other factors that influence this relationship. They operate in a relatively small market compared to the global financial market. Therefore, specific events can have an enormous impact on them. That said, cryptocurrencies have volatile value, and investors should always keep this in mind when they are managing their assets.