In its tenth year Bitcoin has started a new attempt and since the beginning of the year has recorded a double-digit percentage price increase from USD 3,766 to USD 5,290 (as of 18 April). Since its peak of USD 19,290 in December 2017, the crypto currency had lost very much in value until the beginning of the year. But is Bitcoin now celebrating its comeback?
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Bitcoin still dominates the crypto market
Bitcoin is the most widely used digital currency and the leading crypto currency in terms of market value, total market capitalisation and number of transactions. Bitcoin currently dominates the crypto currency market with a market capitalisation of USD 93 billion and a market share of around 50%. Ethereum - the second largest crypto currency - has a market share of only about 10% at a price of USD 171.00. According to CoinMarketCap, there are 2,126 crypto currencies in total.
The first Bitcoin was mined on 3 January 2009 and was first listed on a crypto exchange in October 2009 at a price of USD 0.000764 per Bitcoin. On May 22, 2010, the first commercial transaction with Bitcoin was carried out, in which a programmer bought two pizzas with 10,000 Bitcoins at a price of USD 0.0025 per Bitcoin. Today this amount of Bitcoin would be worth about USD 53 million. Since then, more than 400 million transactions have been carried out with Bitcoin and the number of transactions per day is currently around 400,000.
The Bitcoin price has also risen dramatically. In February 2011, a Bitcoin reached the equivalence of one US dollar for the first time. In March 2017, the price for a Bitcoin was above the spot price for an ounce of gold for the first time. On December 17, 2017 the Bitcoin reached its highest level of USD 19,290. The increase in transactions as well as the price increase since the beginning make the Bitcoin very volatile.
After the massive price slide last year, Bitcoin has now started a new attempt and since the beginning of the year has recorded a price gain of USD 3,766 to USD 5,290 (as of 18 April). Since its high of USD 19.290 in December 2017, the crypto currency had lost very much in value until the beginning of the year. But the Bitcoin could now celebrate its comeback.
Upcoming "Halving" is course driver
The next halving is about to take place, which is a built-in deflationary mechanism to create an artificial shortage of bit coin and avoid inflation. Those who provide computing power for the provision of transactions are rewarded with Bitcoins. However, in order to avoid too many bitcoins being in circulation, this remuneration is halved at regular intervals. When the unknown founder Satoshi Nakamoto mined the first Bitcoin at the beginning of 2009, he was paid 50 Bitcoins. After almost four years, the pay was halved to 25 Bitcoins.
The last halving to 12.5 Bitcoins took place in July 2016. In future, mining will be rewarded with only 6.25 Bitcoins from 24 May 2020. This artificially reduces the Bitcoin supply in order to stabilise the price of the Bitcoin. Halving will end in 2140 when the maximum number of 21 million Bitcoins has been reached. This halving is already priced into the Bitcoin price. When the last halving took place in July 2016, this resulted in the largest price rally to date.
In addition, some Bitcoin supporters took some of their profits last year and would now return to the market. A Bitcoin order weighing USD 100 million seems to confirm this. In addition, there are constant technical improvements that are also driving demand.
How to participate in the price rally?
The upcoming Halvings could be used as an entry point into the Bitcoin. Initial analyst estimates predict a strong rise in the Bitcoin price around the coming halving. But even with an expectation of a moderate price increase, investors with an open-end participation certificate on Bitcoin can still rely on this outlook without owning Bitcoins themselves.
As the further development of the share price depends on a number of factors relating to Group policy, the sector and the economy, investors should take the risk into account in their investment decisions. Developments can always be different from investors' expectations, resulting in losses.