The reasons for the increase in the price of bitcoin

In the last 20 days the price of bitcoin has increased by about 30%.

In fact, it has reached peaks that had never been seen since January 2018, when the speculative bubble at the end of 2017 was bursting.

In fact, already in the middle of last year, when Facebook announced the Libra project, the price exceeded $13,000, but it did so for a very short time, without being able to reach $14,000.

What’s different now than then?

The main difference most likely is the May 2020 halving, which has actually reduced BTC’s offer on the market.

It should not be forgotten that bitcoin mining has very high costs that very often have to be paid in fiat currency. This means that a large proportion of the new BTCs cashed in through mining have to be sold relatively quickly in order to finance mining.

In addition, after the miners‘ premium was halved, the hashrate paradoxically increased over the course of the months, increasing the costs of mining itself.

In May, in conjunction with halving, the hashrate reached a new record, only to fall and rise again in mid-October, setting an even higher record.

However, as BTCs mined are half as high as they were at the beginning of the year, the supply on the market since May is likely to be down in the medium term.

Bitcoin price growth in October 2020

But why has there been the most significant increase since 8 October?

In fact throughout 2020 it had fluctuated more or less around $10,000, with a peak at over $12,000 in August, but only in October it broke through the $13,000 wall.

Almost certainly the main triggering event was the announcement of PayPal. Although it had already been assumed in June, and although the price had already risen above $11,000 even before the final announcement, the push to $13,000 most likely came from there. But there are also other events behind that +30% in 20 days.

The continuous purchase of bitcoins on the market by listed companies such as Microstrategy, which use it as a store of value, must have played a role as well.

It has to be said, however, that this is a phenomenon that began in August, when BTC’s price first tried to break through the $13,000 wall without succeeding.

According to some people, the increase in recent weeks may have been affected by the upcoming US presidential election, although there are different views on how it could have affected this.

However, there may also be some temporary inverse correlation with the US stock markets, and in particular the Nasdaq index, which has been falling on average since 12 October. From this point of view, however, no evidence has yet emerged that would make it clear and precise which inverse correlation it could be.

What is certain, however, is that during the second half of 2020 in particular, more and more financial institutions, including banks, seem to be ceasing to be hostile to Bitcoin, taking it more and more seriously.

At a time of falling supply, due to halving, this may have prevented a drop in demand of the same magnitude.