Are you looking for the reasons what is setting the adoption of crypto on fire suddenly now? Well, we have all the answers for you!
From the end of 2019, the crypto started to rise in the market then in three months, the price rises to 68% that even surpassed Gold or any other asset class. Besides, investors have a major role in uprising the price of the cryptocurrency in today’s market.
You will know further about the factors that caused the sudden rise in cryptocurrency by going through the article. You will surely get your answers about crypto on fire from here. So, don’t waste any more of your time and scroll down to know more about crypto.
With cryptocurrencies increasingly gaining popularity, a modern financial system has been brought forward – and as it appears, this is unlikely to change any time soon.
As the number of people across the globe familiarising themselves with the use of digital money rises, crypto is now on fire. For both good and bad, crypto has stolen the spotlight yet again this year, and you’re going to find out how and why.
Why Is Crypto On Fire This Year?
Once 2020 came to an end, the values of cryptocurrencies reached a peak record, with popular coins like Bitcoin and its alternatives (Altcoins) surpassing their highest prices by far. The value of Ethereum, for example, has evidently doubled – and as it stands today, the market capitalization for crypto is over $1.6 trillion.
Setting crypto on fire, the trend continues this year; while a large number of investors now choose DeFi (decentralised finance), the values for cryptocoins exponentially increase, along with a number of whale that ‘hoard’ these coins. What’s more, big companies have entered the crypto scene in the past months.
Aside from such reasonings, digital money is also expected to pave a new path to FIRE, but what does that mean? Thanks to its convenience and high value, it may now be possible for people to buy crypto and as a result, attain ‘Financial Independence, Retire Early’ (FIRE).
The FIRE movement focuses on aggressive saving and investment which in turn allows for much earlier retirement than traditional plans, and by investing in cryptocoins, achieving this financial freedom becomes one step closer to reality.
Keep scrolling! We are providing you as many reasons or theories that we have gathered and analyzed for you to ease up your curiosity about cryptocurrency.
11 Reasons Why Crypto Is On Fire
Why crypto is on fire now? There are many theories or speculations about the sudden rise in cryptocurrency. So, we try to get the best possible reasons that caused the crypto on fire in the US market.
Virtual money will likely become mainstream in the near future, and listed below are few reasons that have set crypto on fire:
- The benefits of relying on a decentralized currency outweighs those of government-regulated fiat money.
- Greater opportunities of making huge profits: as crypto gains worldwide recognition, investors are making the best of crypto’s high volatility. Since prices can change drastically within seconds, high profits can be generated at given times.
- Popular big companies (such as Tesla) have entered the cryptocurrency dimension, having purchased around $1.5 billion of Bitcoin by the end of 2020.
- Analysts predict the biggest Altcoin bull run to arise during this year (read more on this below).
- DeFi continues to grow and gain popularity, with new developments like AMM-based DEXes (Automated Market Maker based decentralized exchanges) and Non-Fungible Tokens (NFTs) emerging.
- The large amount of fiat money in circulation has pushed cryptocurrencies to become institutional, and investors eagerly await crypto becoming the new mainstream.
- In comparison to traditional stocks in the US of returns less than 50%, cryptocurrencies prove to have a higher rate of return, even surpassing 100% with strategic trading.
- Considered a major benefit, the independence of cryptocurrency has attracted more people as unlike fiat money, crypto money is not regulated by the governments, and so is free of interference.
- The high liquidity of cryptocurrencies has earned an increasing number of investors by 2021, proving to be one of the easiest means of buying and selling assets.
- Recognized billionaire Elon Musk has invested an approximate $1.5 billion in Bitcoin, stating that the cryptocurrency seems to have high value.
- As prices climb to new peaks, investors have started using cryptocurrencies as a means to achieve financial independence and early retirement, using digital money just like investing in gold and silver.
Booming DeFi Total Value Locked
As Ethereum’s ETH surpasses all time highs, the total value locked (USD) in DeFi reaches a new peak in the previous months.
The TVL, which is the common metric used to measure growth on the DeFi platform (represents the total assets being staked in a protocol), reached almost $40 billion, according to DeFi Pulse.
MicroStrategy Buying And Holding Enormous Amount In Bitcoin
The business intelligence company MicroStrategy, known to provide data analytics cloud-based services, purchased over 19k bitcoins equivalent to more than $1 billion earlier this year.
This acquisition adds to a total holdings of over 90,500 digital tokens. The company stated it has spent an approximate $2.17 billion on Bitcoin alone, and as of March, the company possessed around $4.5 billion worth holdings after additional Bitcoin purchases.
Bought at the price of $45,710 per coin, the company’s holdings increased to 90,859 after the last purchase.
As reported by CNBC, the CEO of MicroStrategy, Michael Saylor, stated that Bitcoin will surpass $100 trillion market value in the future, and further went on to invite other firms to invest in the digital currency.
The world’s largest asset manager, Fidelity has been purchasing the bitcoins for its clients and then selling it. Moreover, we get to know that TD Ameritrade who is an online broker also presented the trading of cryptocurrency in the coming December.
On the other hand, the competitors also purchasing bitcoins with the expectation of an uprising of cryptocurrency in the market. Besides, the major investors of the Bitcoin market can surely boost up the credibility of cryptocurrency. Ultimately, the enhancement in credibility increases the mainstream purchases of cryptocurrency.
Institutions and HNIs Hoard Bitcoin And Other Crypto
Evidently, cryptocurrencies have recently caught the attention of numerous institutional investors, and as a result, institutions are investing large sums in crypto.
In addition to institutions, High Network Individuals (HNIs) also continue to pile on Bitcoin, leaving just about 22% of the currency left for this year.
The primary purpose for this is to hedge against issues like inflation and to protect existing wealth; according to financial enthusiasts, it’s not about ‘getting rich’ anymore, but rather about ’staying rich’.
In December 2019, the price of Bitcoin approximately was at $7200 and at the end of Jan 2020, the price of Bitcoins reached at $9500. The Bitcoin investors already predicted its sudden spike due to premiums and price actions of Bitcoins.
Moreover, the majority of Tether currency traded in crypto exchanges from china since the mid-2019. The exchange was more than the west on-chain activity of currency exchange. Based on this major on-chain activity of Tether, we can say that numerous investors from Asia were storing the crypto at the end of 2019.
Whale Manipulation And FUD
In the world of virtual money, you may come across ‘whales’ – who are whales and what is whale manipulation? Whale traders are individuals or firms that hold a large amount of cryptocurrencies, enough to manipulate the entire market. Whales have direct influence on the valuations of currencies.
In recent weeks earlier this year, users witnessed a tremendous manipulation by bitcoin whales, causing unstable price fluctuations. Reports stated that an estimated $80 billion (which sums up to around 13% of bitcoin) is held by only about 100 individuals, out of the hundred millions of bitcoin users worldwide.
When the price of the crypto suddenly peaked at the end of January, Joe007 already stated many times the Bitcoin rally is fake. Besides, the recent spike was caused by some whales who place fake orders on cryptocurrency trading platforms to fire up the price of Bitcoins.
Still, we can’t say that the sudden rise in crypto is caused by manipulation or not. Maybe it turns out organic if some of the investors start to invest in the Bitcoin market.
Many of the investors are trying to transfer their bitcoins from the exchanges after the Bitfinex scandal. Many people say that this can be the reason crypto is on fire recently. Moreover, many people are facing difficulties in drawing payment from the platform.
Bitcoin came into the spotlight after the scandal. So, many people say that maybe Bitfinex’s members are rising the price of the cryptocurrency to reload their cash exchange. At the end of the day, these are all theories based on the people’s statements.
Increased On Chain Activity
Crypto transactions that occur on the blockchain have surged, as shown by on-chain metrics. In February this year, Ethereum reportedly experienced an all-time high with on-chain activity such as transactions per day.
This is the case not just for the Ethereum platform, but multiple other cryptocurrencies as well. As blockchain transactions increase, processes are developed to be made faster, more sustainable and less congestive.
Due to the sudden spike in Bitcoins, we have seen many sellers face the market to quickly buy the cryptocurrency. Ultimately, it enhances the buying demands of cryptocurrency in the market. It also leads the crypto on fire in today’s market.
Moreover, the sudden increase in on-chain activity of cryptocurrency is mostly caused by Asia investors. The main reason for the accumulation of Bitcoins must be the block reward of halving that is coming in the next months.
Cryptocurrency Market Cap Closing In On Gold With 1.5 Trillion Dollar
Taking the internet by storm, Bitcoin surpassed $1.5 trillion market capitalization in the previous months while the well-known safe asset, gold, reached around $1784.
This has consequently made established investors and analysts compare the two, even though until just recently, cryptocurrencies were ruled out as ‘risky’ and ‘speculative’ by many firms. Backed by the most recent investment from recognized companies like Tesla, one Bitcoin is now equivalent to more than $57 000.
Even though cryptocurrencies still haven’t matched gold’s accessibility by everyone in the population, crypto enthusiasts believe this will change, and are eager to watch the two assets competitively climb higher in value.
Many crypto investors predict cryptocurrencies such as Bitcoin will soon surpass gold’s market cap. Bitcoin is the improvised store of value above gold.
AltCoin Bull Run
A bull run typically refers to an extensive period of increasing prices, which most investors eagerly look forward to. According to expert crypto analysts, the year 2021 will live through a massive altcoin price rise, said to be the ‘biggest Altcoin bull run in history’.
Altcoins refer to any cryptocurrency alternative to Bitcoin, such as the infamous Ethereum and Litecoin. These cryptocoins are expected to have a strong surge, doubling their values by the end of 2021.
Also known as ‘digital silver’, the crypto Litecoin is predicted to join the bull run and soar more than 600% from its current market price. That said, crypto investors are on the look out for coins like Ethereum (ETH) and Cardano (ADA) to flourish later this year.
Faith In Fiat Money Erodes Due To Excessive Money Printing Causing Inflation And Reducing Purchasing Power
The continual increase in traditional money printing has given rise to the question: will fiat currency lose its value this year?
Reports from the previous year 2020 portray that the dollars printed in the United States accounted for an approximate 21% of all dollars ever in existence – the highest number seen so far!
Not just America, but multiple countries have been increasingly printing fiat money, leading to inflation; and as a result, a higher surge in inflation is expected this year.
As seen throughout the years, inflation steadily decreases purchasing power. This has consequently resulted in more people investing in cryptocoins, as fiat money gradually loses reliability.
However, one setback preventing cryptocurrencies from overtaking fiat money is the lack of practical application in traditional scenarios – but throughout the years, this could also change.
We analyze that many people realize this year that Bitcoin is a great idea to invest in. Many of the major investors exchange their funds into Bitcoins. The main reason must be the Bitcoin rally that caused the conversion of altcoins into the bitcoin cryptocurrency.
The rise up in crypto immensely affect the market to shake in amazement. Besides, we have been analyzing that a lot of bitcoin cryptocurrency transferred out of the trading exchanges lately.
Decentralized Blockchains Solving Centralized Market Problems
In contrast to a centralized financial system, decentralized blockchains offer user anonymity, high security transactions, and freedom from government interference.
Traditional banks in the centralized market tend to have high-cost financing, and subjects the people to unexpected issues like inflation.
The peer-to-peer system that decentralized finance utilizes can be seen as an ultimate solution to major traditional problems, and is clearly a huge benefit of digital money.
That said, decentralized blockchains provide the right solution to common centralized market issues like lack of interoperability, inefficiency, and lack of transparency, further offering new opportunities in finance.
Crypto Expansion As A Means For Payment
As a global payment solution, cryptocurrency is predicted to develop and expand its blockchain features to enable cost and time effective payments on a larger scale.
Once this expansion supposedly occurs, crypto will undoubtedly become a more convenient method of payment, not just for larger trading but for day-to-day transactions as well.
Tesla is soon going to accept Bitcoin as a payment method to buy their electric cars. There are a lot of restaurants and business places that accept Bitcoin as a means of payment in the US. Let’s get the crypto on fire movement going to get it accepted everywhere like a credit card.
Efficient Crypto Cross Border Remittances
To this day, cross border transactions remain inconvenient, with unnecessary costs and an apparent lack of transparency. But as opposed to traditional currencies, cryptocurrencies provide a more efficient, inexpensive cross border transfer opportunity, enabling users to carry out international transactions with transparency.
Heating up the financial world now, multiple firms have turned to rely on crypto blockchains for cross border remittances which offers a seamless alternative to the unreliable traditional routes. Crypto on fire speed guaranteed if you’re using blockchain to transfer money internationally than traditional SWIFT payments.
What Should Crypto Do To Become The Future Of Money?
Although some believe that cryptocurrency is still on the path to improvement and is yet to overtake the future of native currencies, numerous investors bet that digital money has enough potential to turn into the mainstream as soon as this year.
Theoretically, cryptocoins such as Bitcoin already fulfill the functions of traditional money (although Bitcoin is mainly used as a value store rather than to make payments), but as digital money still possess risks (hackers, system errors) that must be improvised, crypto can attain the future of money once such risks are successfully ruled out.
Smart protocols like Ethereum possesses Smart Contract risks that need to be minimized with extensive more than decade usage before people start trusting it as a currency. New platforms like Binance Smart Chain are good competitors to take this space due to high ETH gas fees but lack experience and trust being a semi centralized entity.
Is Crypto Fire Going To Kill Gold?
In the community seeking financial independence to retire early, investing in gold has been a solid option throughout decades to ensure early retirement. But with crypto now proving to be a similar value store, finance enthusiasts are wondering; will crypto put an end to the historic asset gold?
Seeing the value of Bitcoin rise to an all-time high this year, investors are betting crypto valuations will likely triple, becoming an excellent investment to achieve FIRE.
For centuries, gold has been the go-to safe asset people invest in to save for a stable future. But in the past years, cryptocurrencies like Bitcoin have helped invest in much more profitable quantities, almost equivalent to gold.
Nevertheless, Gold has shown competitive market prices in comparison, and doesn’t seem to be losing any time soon.
But, rather than replacing gold as a store of value, some crypto users believe digital money provides an alternative, not a substitute, to gold – thus increasing the likelihood of retiring at a younger age with complete financial independence.
Hence, instead of killing gold in the near future, the two assets will presumably coexist and support the FIRE movement to the same extent. Crypto on fire doesn’t mean gold will go away.
Crypto On Fire Creates New Billionaires
On the sudden rise of Crypto in the US market, we have analyzed some theories which might help to know why Crypto is on fire now. Besides, many investors recently bought Bitcoins from the trading platform which certainly cause the rise up in the market.
Although various cryptocurrencies have gained a considerably high value now, Bitcoin doesn’t stop being the most valuable of them all.
And with ‘crypto-rich’ being the new measure of riches and wealth, Bitcoin’s 2021 surge has given rise to new billionaires; by the time the year began, not only did Bitcoin’s price increase by multiple folds, investors increasingly chose the cryptocoin as a hedge against the inflation caused by the never ending pandemic.
Throughout the previous year, several crypto investors have reached the billionaire rank with the crypto on fire rally. Some examples include Matther Roszak (Chairman and Co-founder of Bloq), who owns around $1.2 billion worth of cryptocurrencies.
The Winklevoss twins (Co-founders of crypto-exchange ‘Gemini’ and NFT platform Nifty Gateway), who each hold an estimated $1.4 billion crypto assets. With crypto on fire yet again this year, more billionaires may enter the scene ahead.
Best Crypto To Buy And Experience “Crypto On Fire” Moment In Your Portfolio
To get started with cryptocurrency, it’s ideal to buy the initial coin offering (ICO) for cheap, which will later be worth millions of dollars (that’s what we call crypto on fire moment!) but understand the risk before buying.
As cryptocurrencies increasingly rise higher in value, over 7000 currencies have emerged now. If you have plans to invest in crypto or expand your portfolio, it may prove difficult to decide which crypto is the best choice. That said, here are the top ten crypto worth investing while crypto is on fire this year!
- Bitcoin (BTC) – As one of the most used cryptocurrency, Bitcoin continues to grow in popularity and value, and was also the first ever fully decentralised crypto. Despite its high volatility, it’s known to be stable and in demand, and so is always a great choice to invest in.
- Ethereum (ETH) – Predicted to reach around $4.5k by the end of 2021, Ethereum is definitely one of the best crypto to invest. Ranked right below Bitcoin, Ethereum is known to have the second highest liquidity.
- Cardano (ADA) – Considered one of the most affordable yet valuable crypto, Cardano reached around $30.7 billion market cap earlier this year, and is expected to climb higher in value.
- Celsius (CEL) – Setting Crypto on fire with the lending and earning crypto concept
- Chainlink (LINK) – Referred to as the ‘best DeFi coin’, Chainlink is expected to climb the rankings in 2021.
- Tether (USDT) – Backed by mainstream currencies, Tether is one of the best coins to invest in 2021 and is currently the most traded cryptocoin.
- Litecoin (LTC) – Litecoin is preferred for its high liquidity and huge market capitalization. With a faster mining time and higher block reward, this crypto is quickly earning recognition among crypto users.
- Binance Coin (BNB) – For those interested in expanding their portfolio, the utility token Binance Coin is an excellent choice, currently ranked in the top ten on CoinMarketCap.
- Basic Attention Token (BAT) – A utility token utilised by Brave browser, BAT has continued to be a consistent coin used mainly to tip content creators. The demand for this coin is forecasted to grow greatly in 2021.
- Bitcoin Cash (BCH) – Expected to triple in value by the end of this year, Bitcoin Cash is known to have reached a high market cap of $9 billion previously. BCH is a lot cheaper to invest, but is a smart choice overall.
Bitcoin is trading today at all time highs that can conveniently break the resistance during Asia trading hours. Due to the sudden rise in the crypto market, many other cryptocurrencies that were really affordable in price went out of reach for retail people. Everything is at a minimum 10X from its all time low prices since 2018.
In the seven weeks, the cryptocurrency according to market value has risen by $9000. It seems that the leading cryptocurrency is facing challenges the high value of bitcoin. But the main question is why crypto is on fire now?
We analyze that cryptocurrency is considerably rising in the last few months. The reason must be to reach the mining reward halving that takes place every four years to keep the rise in cryptocurrency according to the miner costs incurred to keep the network secure. The sudden rise in crypto causing the crypto on fire phenomenon looks similar to what we have seen four years ago in the US stock market.
By analyzing the price of bitcoin now, some analysts predict the price of the bitcoins cryptocurrency is going to reach unthinkable values in the next year. Besides, the rise up is also caused by the participation of institutions and the growing appeal by bitcoin among retail people to let crypto on fire.
Moreover, many investors are now buying and selling bitcoins in the market nowadays. This also causes a sudden rising in the bitcoin market. The on-chain activity on the trading platform grows recently due to its increase in the transformation from different cryptocurrencies into the bitcoin.
Key Takeaway – Crypto On Fire
What does 2021 have in store with crypto so aggressively on fire? To sum everything up, the year 2021 will be significant for crypto traders across the world for multiple reasons, and cryptocurrency may as well become the future of investment. And according to numerous crypto enthusiasts, 2021 will be the best year to invest in crypto, for both new users and expert investors.
Wrapping up, we have satisfied your curiosity about why crypto is on fire now providing the theories and factors that caused the rise in the price of crypto. We hope this article helps you with its provided information about the rise up in cryptocurrency.
With bitcoin’s history, we never know about the sudden shifts in price that can occur suddenly which can change the market fundamentally. Besides, you know the price of cryptocurrency on fire keeps the volatility high throughout the year. According to the new patterns of bitcoin, the major investors very likely to continue involving themselves in the bitcoin exchange.
From the future’s perspective, bitcoins and other cryptos are still risky investments. Besides, you can invest if you are interested in the cryptocurrency. Moreover, the current rise in the crypto price might provide you with benefits after your investment in the crypto market. Let’s keep the crypto on fire flame going on with an extended bull market!
I am a data analyst by profession who loves to crunch numbers at daytime and come home wondering how my passive income numbers for the day look like. I believe in being rich rather than looking rich. Follow me for Cryptocurrency, FIRE, Personal Finance, Credit Cards and Digital Nomad updates