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Bitcoin hits $50,000 for the first time since May

Photo of: Joseph Stone
by Joseph Stone

After a sharp downturn, the price of Bitcoin is climbing back up with great vigor. On Monday morning, August 23, 2021, the price of the cryptocurrency was $50,145.20 – a level not seen since May. For several months, however, the trend was rather bearish. After an all-time high price of nearly $65,000 in April, several factors have destabilized investors.

First, there is China, which has decided to apply particularly harsh measures against the cryptocurrency. This is only half a surprise. In 2013, the country had indeed already begun to prohibit banks from using Bitcoin as a currency – brandishing fears around the speculative nature of these assets that risked, according to the authorities, “destabilizing the financial system.”

Could the price of Bitcoin exceed $100,000 in the next 12 months?

Then the pressure intensified, as the country has arguably one of the largest communities of miners and cryptocurrency investors in the world. In May the country’s authorities declared a total ban on mining operations. Before sending the police to shut down mining operations and seize equipment.

In late June, the Chinese central bank also announced that payment operators and banks will have to close customer accounts that engage in transactions of cryptocurrencies. This put a brutal stop to a sector that was nevertheless booming in the country in recent years.

Bitcoin seems to be on its way out of the turbulence zone in which it has been stuck for months. The business world, led by Elon Musk, has changed its tune again. The Tesla boss recently said that the automaker would start accepting Bitcoin again as soon as mining operations were 50% powered by renewable energy.

The adoption of Bitcoin and cryptocurrencies by individuals has also exploded in the last 12 months with an 881% increase. Institutional players, too, are flocking to crypto-currencies. From large investment firms like BlackRock which has just added several financial products indexed on cryptos, to firms like Bitpanda which democratize this kind of assets via fractional investment, through actors like Jack Dorsey the boss of Twitter … the rush to digital gold is starting again.

The interest and volumes are such that a Bitcoin price of over $100,000 within 12 months no longer seems out of reach. This is incredible news for those who had the foresight to buy Bitcoin en masse before 2017 when the price was still not worth much compared to current levels…

According to a study by Chainanalysis, released last week and spotted by our fellow Capital, “cryptocurrency adoption has exploded over the past 12 months.” The text shows in particular that countries like Vietnam, India, and Pakistan are among the main users, that is to say, those who use it most for exchanges in terms of the wealth of its inhabitants.
“In emerging markets, many are turning to cryptocurrency to preserve their savings from inflation, send or receive funds, and conduct trade transactions, while adoption in North America, Western Europe, and East Asia, has been driven primarily by institutional investments. In a year when digital asset prices have climbed, each region’s motivations […] appear to have proven relevant.”

Cryptocurrency activity is furthermore growing as decentralized finance (DeFi), i.e., financial services that are new or traditional, but offered in an automated way thanks to the blockchain, develops.