The Bitcoin price is likely to hit $50,000 before the end of this month amid rising geopolitical tensions and growing institutional investments. Bitcoin was up over 17% in a day, surging by more than $6000 at one point to above $44,000.
This was the sharpest daily increase since February 2021. It’s still too early to say whether it will then go on to reach the all-time highs of $68,000 from November 2021. However, it’s not that big a leap from 50k to 68k and the world and the crypto market are moving at an accelerated rate in recent times. It’s certainly not out of the realms of possibility.
What is driving the price of Bitcoin this week?
Geopolitical tensions and institutional investment are key drivers for sustaining the price push. The Ukraine-Russia situation has caused significant financial upheaval and individuals, businesses and indeed government agencies – not just in the region but globally – are looking for alternatives to traditional systems.
We have seen crypto be correlated closely to the US stock market for months, but Bitcoin is showing signs of decoupling from this correlation in the short term. Bitcoin is being heavily bid due in part to the narrative of being a permissionless and censorship-resistant way of transferring value, as it has been used during the crisis in Ukraine as well as political unrest in Canada. It is also fascinating that, after a week into geopolitical uncertainty, Bitcoin is outperforming gold, which is known as a safe-haven asset.
As banks close, ATMs run out of money, threats of personal savings being taken to pay for war, and the major international payments system SWIFT is weaponised, amongst other factors, the case for a viable, decentralised, borderless, tamper-proof, unconfiscatable monetary system has been laid bare. And as alternatives, such as crypto, prove to be credible and workable, the dollar’s Reserve Status could, ultimately, be in jeopardy.
Savvy investors know this and will be further increasing their exposure to cryptocurrencies before prices rise further. The appeal of global, digital currencies in our increasingly tech-driven world is, of course, not going unnoticed by institutional investors who include credit unions, banks, large funds such as a mutual or hedge fund, venture capital funds, insurance companies, and pension funds.
Institutional adoption is also a major factor
In fact, some reports say that institutions – who bring with them enormous capital, expertise and reputational influence – are now the dominant traders of cryptocurrencies. As more and more institutional investors take control of the sector, credibility increases, trading volumes go up and volatility goes down – this is all good news for everyday investors.
Developments in recent days have put a spotlight on Bitcoin’s key traits, which include being borderless, permissionless, censorship-resistant and unconfiscatable. These inherent characteristics have enormous – and growing – value. This is why Bitcoin is now the 14th most valuable currency in the world.
“I think the increase in publicity for crypto as an alternative settlement method has been positive overall,” noted Marcus Sotiriou, an analyst with UK-based digital asset broker GlobalBlock. “This is because millions of dollars have been donated to Ukraine through crypto. Over $19M in crypto donations has been sent to Bitcoin and ERC-20 (ETH) addresses of the country, which were shared on the official government twitter account. This marks a historical moment – the first time that a government has raised money via crypto at scale. The negatives being discussed are clearly outweighed by the power of crypto to act as a solution.”
