- Unrest in the US is likely the reason behind the Bitcoin price hike.
- Traders believe Bitcoin will see a hefty reversal.
- Bitcoin price rises in unrests and the current hike is a likely bubble.
The value of cryptocurrencies lies in their perceived value. As consumers expect increases in prices, they buy more. The increased number of buyers shift the market’s control to buyers from sellers, which is when bullish momentum gains hold of the market.
Bitcoin price started to gain traction in October of 2020 and the king has been enjoying a bull market streak ever since. Bitcoin broke its previous all-time high and continued on its upward trajectory. It does not look like the cryptocurrency will be slowing down anytime soon even though analysts keep predicting strong corrections; such are the norms in the cryptocurrency market.
Currently, Bitcoin can be seen hiking upwards, and the cryptocurrency is establishing new highs every day. At the time of writing, Bitcoin stands at $41,000, and $50,000 seems like a plausible target for now.
Bitcoin price: Historical Trend and current unrest
The more logical option seems to be a sharp decline in Bitcoin price because of the unrest in the US, but Bitcoin has a history of going up during unrests. In May of last year, when riots broke out in the US, Bitcoin price had surged to $10k, and the riots did not appear to have influenced the Bitcoin price in any negative way.
In a similar fashion, during the 2020 US elections – in November – Bitcoin price peaked at $16,000; again, the election unrest had no negative impact on the cryptocurrency whatsoever. Two likely conclusions can be drawn from this: Firstly, Bitcoin is facing such major bullish pressure that political unrest does not have the power to affect it anymore, or secondly, Bitcoin thrives in unrest.
The cryptocurrency market is regarded as a safe haven for investors. May it be unrest or any other reason; if a country’s currency loses value putting the financial market is at risk, investors turn to the safer options – cryptocurrencies. As the financial market is impacted greatly by the country’s economic and political situation, investment becomes very risky.
Moreover, unrest is synonymous with lower confidence in the government, which makes investors turn to cryptocurrencies, a domain where the government has next to no role. Bitcoin, being the market leader and the original cryptocurrency is the viable option for new investors. We have empirical evidence that civil unrest is not positively correlated to the financial market. Still, as the cryptocurrencies are relatively new, there is not enough evidence to establish cryptocurrencies’ relationship with political unrest.
Bitcoin, depending on which scenario is true, can take two very distinct turns. In the first scenario, as unrest negatively impacts the financial market, we can expect that the long-dreaded corrections will soon occur as investors grow wary of the current political turmoil in the US. Bitcoin price can be expected to drop drastically if corrections hold. In the second scenario, Bitcoin can be witnessed to thrive amidst the political unrest and continue its upward trajectory with even stronger force. If one has to bet, we will bet on the second scenario.