The bitcoin price has hit $40,000 for the second time this month. While technically the asset had done so during yesterday’s early morning hours, the currency ultimately underwent a bit of a correction later in the day that brought it down into the $39,000 range.
Bitcoin Strikes the $40K Anvil
Now, however, bitcoin has hit $40K again and it looks like it’s aiming to stay there. In just the last 12 months alone, the bitcoin price has managed to grow by a whopping 400 percent.
Many analysts have been going back and forth regarding what could possibly be allowing bitcoin to spike so high. Is it due to COVID? Are people seeing it in a whole new light? Is bitcoin finally being viewed as a store of wealth?
These are all likely contributing factors, though according to new research now being released by top cryptocurrency exchange Kraken, whales got their fingers on many additional BTC units during the month of December, which is likely adding to the bitcoin price more than any other financial element.
In a report published earlier in the week, Kraken writes:
Bitcoin ‘whales,’ addresses with more than 100 bitcoins, accumulated an additional 47,500 bitcoin amid bitcoin’s ruthless rally throughout December. Not only did the aggregate number of bitcoins in whale addresses hit its highest level all year, 11.46 million bitcoins, but addresses with a balance of more than 100 bitcoin surpassed 16,300 – a reading last seen on March 16, 2020.
Throughout December, BTC managed to jump by roughly 50 percent. From there, the asset has added another 40 percent during the first week of January, meaning that the bitcoin price has almost jumped by a full 100 percent in the last month.
In addition, the currency continues to be viewed as “digital gold” by institutional investors, who are now concerned about the overprinting of funds and see bitcoin as a potential hedge tool that can keep one’s wealth safe during times of economic strife.
Nathaniel Whittemore – who hosts a BTC podcast – said in a recent interview:
A Rubicon has been crossed with entirely new categories of institutions and corporate buyers. The retail fear of missing out (FOMO) is starting again, and this is all coming into a macro environment featuring significant tailwinds in the form of growing inflation expectations. Compared to other macro hedges, bitcoin is not only cheaper but has much more attractive upside potential. Just because the price is more than it was doesn’t mean it isn’t still undervalued.
Will It Soon Drop?
Still, despite BTC doing so well as of late, others are continuing to warn us that the asset is headed for a correction soon. David Mercer – chief executive of crypto exchange LMAX Group – states:
Whilst we think the future is very bright for the asset class, we still anticipate some bumps along the way.