The election victory of Donald Trump in the United States is not considered the main reason for the recent price surge of Bitcoin .
Bitcoin: The Primary Catalyst Behind the Recent Price Surge
Supply Shock After Halving
The election victory of Donald Trump in the United States is not considered the main reason for the recent price surge of Bitcoin. Jesse Myers, co-founder of Onramp Bitcoin, acknowledges that the Bitcoin-friendly new administration has provided a partial catalyst; however, he indicates that the primary reasons are related to the supply shock following the halving event.
The Bitcoin halving that occurred in April cut block rewards from 6.25 BTC to 3.125 BTC.
This means that each new block becomes harder to solve, and the rewards decrease. Myers stated, “The real story is that we are over six months past the halving.”
The reduced supply indicates that there is insufficient supply at current prices to meet demand.
Myers added, “Prices will need to rise, which could lead to a bubble.” Onchain analyst James Check noted that gold added approximately $6 trillion in market value over the past year, while Bitcoin only holds a market cap of $1.6 trillion.
Increased Demand for Bitcoin
Anthony Scaramucci reassured those who have not yet invested in Bitcoin, saying, “You may feel like you missed out, but you are still at the beginning.” It is anticipated that the U.S. will establish a strategic Bitcoin reserve, with other countries likely to follow suit. Currently, 94% of existing Bitcoin is either in circulation or lost, implying that only about 1.2 million BTC could be added to the circulating supply.
Historically, the halving of Bitcoin’s supply every four years has resulted in price surges and bubbles.
This cycle ensures Bitcoin remains a unique investment vehicle, with expectations of further price increases in the future.
Bitcoin investors predict that prices will continue to rise due to the supply shock following the halving.
The interplay of decreasing supply and increasing demand raises Bitcoin’s value, while interest from institutional investors and governments is also on the rise. These dynamics bolster Bitcoin’s long-term sustainability.
Conclusion
In conclusion, the recent surge in Bitcoin prices can be attributed to the supply shock following the halving event. While the Bitcoin-friendly new administration in the United States may have provided a partial catalyst, it is the reduced supply and increased demand that are the primary drivers. As Bitcoin continues to gain interest from institutional investors and governments, its value is expected to rise further. With a limited supply and a history of price surges after each halving event, Bitcoin remains a unique investment opportunity with long-term sustainability.