Why is The Crypto Market Rising Today?

It is indeed true that little drops of water make a mighty ocean. Since the introduction of the first cryptocurrency (BTC) over a decade ago, there has been an influx of new ones. We now have about 25,000 assortments of cryptocurrencies as of 2023.

What is more fascinating is that about 40 of these cryptocurrencies have a market capitalization that transcends a billion dollars.

The meteoric rise of Bitcoin and the entire crypto verse over the last 4 years has been attributed to 3 main pillars which will be discussed in detail in the subsequent part of this piece. Keep reading to find out the causative factors triggering the surge of the crypto market and if it’s a great time to buy Bitcoin online. Let’s get started.

What is the Crypto Market?

The crypto market is a virtual and decentralized market where cryptocurrencies are bought, sold, and traded as determined by market prices. The crypto market is the place where the rise and fall of crypto takes place. To access the crypto market users often sign up on a cryptocurrency exchange platform that caters to their immediate needs. For instance, a crypto enthusiast living in Australia may decide to opt for an crypto exchange Australia for a more personalized experience

Reasons for The Surge in the Crypto Market

Several triggers like institutional adoption, tech advancement, and global economic insecurity have been dubbed by economic experts as factors affecting the spike in prices of cryptocurrencies. Let’s discuss these factors one after the other:

Institutional Adoption

One of the primary factors influencing surges in the crypto market is the term known as institutional adoption.

By institutional adoption, we mean the efforts of establishments or corporations in welcoming cryptocurrency as a good and secure store of value and a good armor against the sword of inflation with open arms.

Due to this deliberate adoption, more attention has been brought to the crypto market as a whole. Several top companies like Starbucks, PayPal, Microsoft, Ralph Lauren, and Balenciaga now accept payments in cryptocurrencies as customers are now deviating from the age-old economic practice of purchasing products and services with regular fiat currencies.

Also, companies like Tesla (owned by Elon Musk) and Square broke the news for allotting a portion of their treasuries to cryptocurrencies, especially bitcoin. This singular corporate move triggered general public acceptance.

Another manifestation of institutional adoption is investors using cryptocurrencies to broaden their investment portfolio. Investors do this to keep their investments from being tossed by the market volatility of traditional fiat currencies

Apart from the above, other instances of institutional adoption and support are the active participation of companies in the crypto-verse. Companies often show their support by supporting blockchain development, Decentralized finance projects ( DEfi), and other projects in which digital assets are at the core of their vision.

Growing Retail Interest

Another variable contributing to the spike in the crypto market is the ever-increasing retail interest in the crypto-verse. The heightened retail interest can be traced to the multiple user-friendly apps and cryptocurrency exchanges designed to simplify the entire crypto trajectory.

This in turn coupled with the FOMO (Fear of Missing Out) that most retail investors experience as a result of unexpected price surges are causative factors of the rise. We could say that the growing retail interest which has led to a massive surge in the crypto market can be attributed to the potential for high returns on crypto investments.

Furthermore, the improved regulatory frameworks concerning cryptocurrencies have sustained the interest of investors who are wary of running into regulatory/compliance issues as a result of policy breaches. Policies relating to tax, consumer protection, and licensing can be immediately ascertained by a simple search.

Inflation Hedge

In finance and economics, the term inflation is treated as an enemy that has pulled down strong nations due to its ripe effects. To be on the safer side and to circumvent inflation in cases of currency devaluation, there has been a rise in the number of individuals willing to keep their finances safe by investing in digital assets like Bitcoin.

Global Economic Uncertainty

Confidence and stability are the core principles of macroeconomics as volatile economies are occasioned by inflation, wars, or recession which are bad for business. The dwindling confidence in economic events has led a good amount of individuals to turn to crypto investments as a haven.

The COVID-19 pandemic is a good illustration of the dangers of uncertain times and its ripple effects.

Owing to its emergence, there was a blockage of the flow of income in various countries of the world and this in turn led to decreased consumer spending and investment. Even Bitcoin was not spared from the decline that hit most currencies as it lost value during the time before re-appreciating over the months.

Technological Advancement

Of course, where would the world be without technology let alone the crypto market landscape? Due to the emergence of new technologies like the lightning network that ensures fast transactions and reduces congestion during processing, there has been an influx of new traders willing to dabble into cryptocurrency investment as transactions have become more seamless.

Also, improved privacy features targeted at anonymity and privacy, especially in the usage of public blockchains are speeding up adoption among skeptics. Smart contract platforms like Ethereum, and Binance Smart Chain have also led to the creation of Decentralized apps.

Conclusion

Although the crypto market boasts of an overwhelming sum of $1.12 trillion and investment in crypto serves as a good shield against inflation, potential buyers or traders are advised to carry out a fair deal of research and assess their risk tolerance before diving in. While investing in the crypto market may be a profitable venture, incurable losses could also happen if the right strategies are not put in place and followed. Pro tips: use the best crypto exchange in Australia or wherever you may be. Also, at all times, do your own research (DYOR)!