The pandemic and related economic calamity pushed people towards cryptocurrency assets as an attractive alternative. Confidence in traditional investments and economies has eroded, and cryptocurrency’s decentralized nature encourages investors to put Bitcoin and other currencies into their portfolios. Driving this interest is also a function of Bitcoin’s limited supply. Approximately 18.5 million in circulation, it is reaching the maximum 21 million coins. And with several million coins lost due to misplaced keys, the actual available supply is even smaller.
Demand for Bitcoin (and the price) also increased after the May 11th halving event, which reduced the mining award for the cryptocurrency. The halving brought additional attention to Bitcoin as well as the entire market, as more news outlets and the broader community learned about more about how cryptocurrencies function.
Broad Acceptance and Understanding
The Millennial generation is driving acceptance of cryptocurrencies as they are already comfortable holding digital assets and using their phones as their banking tools. Bitcoin is also in its 11th year of existence, so for a 23-year-old investor, the currency has been around for all their teenage and beyond years. It is not a “strange new thing,” to this group, but instead, an established form of currency that’s in-tune with other globally accepted tools and platforms.
Financial players are entering cryptocurrency at a furious pace. Fidelity launched a platform called Fidelity Digital Assets, which is a trading tool for institutional investors to hold certain cryptocurrencies. This type of offering represents a fundamental shift where big financial firms once mocked or downplayed cryptocurrencies, but now actively want to join the market before they are left behind.
Buying Made Simple
The proliferation of cryptocurrency ATMs from companies such as Bitcoin Depot is greatly expanding and simplifying the purchase, sale, and access to digital assets. These machines also offer opportunity for underbanked populations to buy, hold, and sell cryptocurrencies, so the potential gains are not restricted to people in the tech industry. The “underbanked” are people with limited access to traditional banking accounts or related financial instruments, either by choice or not. Bitcoin ATMs enable them to hold cryptocurrencies as an investment and leverage micro-lending opportunities to fund a or expand a business.
This is a turning point for the cryptocurrency market. Barriers to entry continue to fall, investors gain deeper understanding about cryptocurrencies and the bigger players see opportunity. The considerable uncertainty and disruption of 2020 has wreaked havoc for many industries, but has created an ideal moment in time for people to consider cryptocurrencies as investments and a new type of daily currency.
Disclaimer: This content does not necessarily represent the views of IWB.