On Saturday, Bitcoin, the world’s largest and most well-known cryptocurrency, surged 4.6 percent to cross the USD 20,000 barrier for the first time in over two months (January 14). Bitcoin increased in value to USD 20,853 at 01:01 GMT on Saturday. It added USD 922 to the previous closing value.
The cryptocurrency is up 26.4% from its January 1 low of $16,496. Ether, the cryptocurrency tied to the Ethereum blockchain network, increased by 5.91 percent to USD 1,536.9. It increased its previous close by USD 85.90.
Not long ago, cryptocurrency was thought to be an excellent investment. However, recent volatility has damaged investor confidence. The recent bankruptcy of cryptocurrency exchange FTX has heightened fears. The crypto sector as a whole is going through a transition period. Crypto.com said on Friday that it would lay off approximately 20% of its personnel.
The announcement by the Singapore-based company comes amid widespread concerns regarding reserves and solvency, and only a few days after rival exchanges Coinbase Global Inc and Huobi announced intentions to lay off approximately 20% of its workforce. According to Reuters, Genesis has also slashed positions, accounting for 30% of its personnel.
The layoffs at Crypto.com would be the company’s second in approximately six months, following job cuts in July last year to weather the macroeconomic downturn caused by rising interest rates.
What has caused the increase in Bitcoin prices?
Prices have risen due to a variety of circumstances, including increased adoption during the pandemic. Globally, significant players such as PayPal and Indian institutions such as the State Bank of India, ICICI Bank, HDFC Bank, and Yes Bank have given cryptocurrency legitimacy through their judgments. These Indian banks, for example, are said to have permitted their customers to use their bank accounts to fund cryptocurrency trading.
In India, financial institutions have frozen the accounts of many exchanges in 2018, following a directive from the Reserve Bank of India that prohibited banks from using their systems for cryptocurrency-related transactions. However, in March of this year, the Supreme Court overturned this order.
The main element (in the recent spike in Bitcoin prices) has been the authority granted to some pension funds and insurance firms to store a modest portion of their capital in Bitcoins. After that, availability became a concern, resulting in a price increase.
Conclusion
It is worth noting that the price of Bitcoin has dropped dramatically from over $18,000 in December 2017 to roughly $3200 in December 2018. It then increased to over $10,000 in July 2019, before dropping to roughly $5,500 in March 2020. According to market participants, the large price volatility without any substantial underlying cause should make ordinary investors apprehensive.