Not only is Bitcoin the first cryptocurrency ever invented, but it has managed to remain the most successful one, even as the competition grew, namely, today, there are over 2,000 new digital cryptocurrencies. In fact, today, the price of Bitcoin has hit $32,500. And, of course, its market capitalization increased over $614 billion.
This means that if you combine the market cap of other cryptocurrencies, Bitcoin still has the greatest market cap worldwide. In this article, we explore the main factors that influenced the massive growth of the market cap in 2020 and 2021.
Solid Market Position
Like we said earlier, Bitcoin is the first cryptocurrency to achieve great success, and it also introduced blockchain technology to the world. So, essentially it had the first-mover advantage, and a lot of investors that got rich thanks to the subsequent bull runs have contributed to the popularity of Bitcoin. So, as new cryptocurrencies entered the market, it was extremely difficult to stand out when most people have associated the term ‘digital cryptocurrency’ with Bitcoin.
The Bull Cycle
Over the years, Bitcoin remained a dominant cryptocurrency, even when it was the subject of volatility. But, the bull cycle of Bitcoin is definitely one of the reasons why today we are looking at a huge market cap. The network is designed to make it harder for New BTC to enter into circulation due to bitcoin halving and the highly saturated blockchain network. So, the price of bitcoin after the recent halving in May kept growing.
It continued to rise, with each month reaching new heights and its climb past $20,000 in December 2020, awhile in January 2021, it broke $40,000. The relatively steady price of Bitcoin and the long bull cycle are the main reasons institutional investors and individual investors were looking to get BTC.
Also, today there is a great number of reputable exchange sites where you can easily get BTC. Therefore, if you want to invest in BTC, it is very easy. In fact, there are automated trading platforms like Bitcoin Pro, and you can register on https://the-bitcoinpro.com/ in a couple of minutes with your smartphone. The platform uses advanced AI –technologies and scalping techniques in order to profit off the fluctuations of Bitcoin’s price. To complete the registration on the site, you need to deposit at least $250.
Besides, blockchain technology has many advantages because it is a peer-to-peer decentralized payment system where the transactions are processed almost instantly, it features total transparency, and the fees attached to the transactions are negligible. Basically, if it wasn’t for blockchain technology, there wouldn’t have been other cryptocurrencies, and Bitcoin wouldn’t have had a successful launch.
But, also the entire ecosystem was well designed by Nakamoto. Here we’ll explain more about the miners, as they have a significant role in the entire blockchain network. The miners approve the transactions in the network, and thanks to their work, the newer is safe, and the problem of double-spending is solved.
Today they need special equipment for mining because there is a lot of competition and working on the network requires a lot of computing power.
Furthermore, Satoshi programmed an event called Bitcoin halving to split the reward the miners get and with that to control the inflation rate of Bitcoin. The finite supply of Bitcoin (Satoshi Nakamoto limited the supply to 21 million BTC) coupled with the decreasing reward of the miners, has basically made Bitcoin a scarce asset.
The event occurs after 210,000 BTC are mined. Hence, the demand for BTC has increased at a faster rate than the supply, which means the price of Bitcoin grew over time, especially after a halving. Secondly, even with decreasing rewards, miners still find mining appealing because they get voting power, and thanks to the voting power they get, they can make changes in the network.
Bitcoin is the largest cryptocurrency in the world by market cap. It is also widely used, and a lot of investors want to get BTC because they think of it as a safe-haven asset. And it’s safe to say that the bull run of Bitcoin is, for the most part, to blame for the huge increase of the market cap in 2021.