Foreword
In order to take a long or short position of the cryptocurrency, it is matter to understand the trend of the bitcoin. Bitcoin has the largest capitalization in the cryptocurrency market; it will also affect other cryptocurrencies as an index of others.
Fundamental Analysis
Government
At this stage, many countries are not welcome the formal use of bitcoin as their legal tender.
Most countries believe it would highly vacillate the fundamental of their fiat money, leading to distrust of their money, making the central bank (Federal Reserve) lose control in print money and control their economy. They are trying to ban mining crypto, not allowing provide services, with many unreasonable reasons.
Some believe that it should regulate this new financial technology and require licensing, include this into the monetary authority system, and provide an alternative investment product.
El Salvador is an exceptional case. It is the first country in the world to accept bitcoin as its legal tender. The country is used only to accept US dollars, and bitcoin did not replace it instead of coexisting.
Serval reasons why El Salvador quickly adopt bitcoin as a legal tender mainly due to a portion of their people’s income are from overseas, in which overseas transfer fee is expensive, along with the lack of a number of people using banking services, delaying its development of financial industries and the flow of money.
Central Banks
I would say that central banks might not wish the cryptocurrency are circulating in their system. One of the tools is to control the economy by increase or decrease the country money supply. As you can see, they could not control it, instead of might control it by the institutional investor.
Therefore, they do not encourage the general public to invest nor for daily use.
Instead, I will take China as an example. Their central bank invented a digital currency, the so-called ‘digital yuan’. The government could easily manipulate the system in a poor transparency manner, sacrificing the privacy to trace down the user in a severe level that might freeze and kick the user out of the system.
Key Opinion Leader
Have you ever seen or heard any that some famous people say that support some of the cryptos?
Some famous such as Cathie Wood wish to create a bitcoin ETF; Ray Dalio bought bitcoin for his portfolio; Elon Musk had bought Dogecoin, and his company ‘Tesla’ once had bought and accepted bitcoin (Bitcoin no longer be taken for purchase Tesla’s cars, due to environmental issue, he claims).
These actions of these people are highly motivating the price of bitcoin.
Bitcoin Update (Upgrade)
The next upgrade, ‘Taproot’, will take effect in November 2021. It would be a significant step of bitcoin, increasing for greater privacy and efficiency. At the same time, it might provide a new function as ether providing, which is the smart contract.
It is a big focus for this cryptocurrency, as it is a bull factor.
Platform and Business Support
Well-known companies that invested in bitcoin or support bitcoin are kept investing in their infrastructure, new technology and hold more bitcoin. It would be powerful propulsion to the value of it.
Such as Square is creating a bitcoin wallet, Binance is committed to bringing a better crypto-based ecosystem. Greyscale and MicroStrategy keep supporting and purchasing bitcoin.
For instance, other financial service providers, PayPal allows that customers buy, sell, and hold their cryptocurrency; Visa had approved the first Australian card for spending bitcoin, Mastercard also will join into this game soon, etc.
More and more evidence shows that bitcoin is integrating into our lives, penetrating every aspect of our lives.
Thought
Follow the news is a great move, but every investor shall make that own determination. You could check out the article I previously wrote. It is about why you should not believe the word in others.
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