The ever-changing landscape of cryptocurrency makes it one of the most lucrative and dangerous markets to invest in. The fluctuating market has, in its own right its own mind. In most cases, supply and demand determine the value of an asset. One of the main reasons cryptocurrencies like Bitcoin fluctuate so much in price and value is down to its value against fiat currencies. Some even believe Bitcoi will surpass fiat shown in the graph below.
(Source – Capital Finance International)
For example, Bitcoin has properties that make it very similar to investing in metal such as Gold. This is because Bitcoin is governed by a design decision by its developers who only produce a fixed quantity, creating limitations. As mentioned earlier, supply and demand are what makes Bitcoin and many other cryptocurrencies so unstable.
Its fluctuation is determined by the amount of people who are trying to buy them vs the amount of people trying to sell them. If more people are trying to buy then selling, the price of them will go up, and if more people are selling them, the value of them decreases.
Bitcoin in 2021
In the first few weeks of 2021, Bitcoin has seen its biggest two-day slide since March, the beginning of the pandemic in 2020. The cryptocurrency slipped a whopping 24%. In the past year, Bitcoin has quadrupled, making investors reminisce of its popularity in 2017, which is what created a cryptocurrency craze.
Although Bitcoin at large is very turbulent depending on its unique properties, many industry analysts claim there are many more corrections the bitcoin will experience in the future. There will be many declines, almost as big as 50%. As the world economy recovers from the pandemic, and investors become fewer, declines and fluctuations will become more frequent.
However, those who are true believers in Bitcoin don’t believe its future is as bleak as it has been out to be. They believe that this steep decline is much different from the initial drop after its highest points as assets have matured over time. This is due to investors coming from institutional backgrounds and more influential organisations that have helped Bitcoin hedge against the dollar and gold.
(Source – Nasdaq)
Those who have lost faith in Bitcoin believe that its highs and lows are unearthed from reasons that are supported by vast swathes of fiscal and even monetary stimulus. For this reason, they accept Bitcoin will be unable and unlikely to serve as a viable currency alternative against them.
However, there are still many investors who are keen on getting rich through acquiring Bitcoins which means it is continuously drawing regular attention from a range of different investors and people. Some investors may not have the capital to invest in Bitcoin when it first started out, but as it plummets, hitting an all-time low, they may have the opportunity to invest into it, which will again bring its value up.
Tech firms entering cryptocurrency
For many tech companies, cryptocurrency remains a considerable point of interest. Not only because of the success stories that many companies have had from acquiring them. But also, the potential it has to be able to offer their customers something unique.
Over time, Facebook has acquired a company called CahinSpace. ChainSpace is a London-based distributed ledger technology company that will help Facebooks to launch a coin owned by them. There has been much speculation since 2019 of a crypto called Libra coin owned by Facebook which could be making an appearance on the market soon. Although this is a big move from Facebook, who in their own right are social media giants, doing so may help drive better inclusions and overall investments in cryptocurrency as it brings in a new audience.
One of the things Google is best at is creating software and platforms which are user friendly and work well. However, they are approaching the cryptocurrency market to take a slice out of the pie. Google is coming at it from a different angle. Rather than offering a coin, Google has announced that they will be releasing a search engine that will allow users to find and search for the trending top blockchain and cryptocurrencies. Google already has smart applications that sit on intelligent devices capable of also holding cryptos as many smartphones now have crypto wallets, which only makes sense.
For the most part, it is exciting to see how the landscape of cryptocurrencies will change over time as more companies begin to contribute and take part. Its mass adoption and interest could see it move into a unique space and allow it to become more practical. Many initiatives have helped make cryptocurrencies more accessible, such as Mastercard, who has launched a new card that will enable users to spend their crypto as they would their fiat currency.
