One reason bitcoin and other cryptocurrency prices are rising is that they are being closely tracked with the stock market this year. In the past few weeks, markets have been largely on the downside, but have recently recovered in the U.S. In the US, Europe and Asia, which has helped cryptocurrencies follow that trajectory. Basically, Bitcoin has its own built-in escrow mechanism in which bitcoin is released and given to miners as a reward for processing transactions.
Every 210,000 blocks mined, or approximately every four years, the reward given to miners for processing Bitcoin transactions is halved. These “safe haven” assets include things like precious metals, stocks in sectors that are generally less volatile, and, more recently, Bitcoin. In doing so, Bitcoin's inflation rate halves every halving and its stock-flow ratio doubles every halving. Popular PayPal and Venmo competitors, Square (SQ) and CashApp, also accept cryptocurrencies, making Bitcoin's audience even wider.
This means, of course, that there could still be many more ups and downs for Bitcoin and cryptocurrencies in the meantime. Although until now there are no regulations prescribed by the Indian government or any such regulatory body, Bitcoin trading is allowed in India. Recently, a trend began in which publicly traded companies were starting to convert cash from their treasures into Bitcoin as a stronger store of value. Many businesses and even brick-and-mortar stores accept Bitcoin payments and therefore have real monetary value.
Bitcoin and Ethereum prices fell last week after Federal Reserve Chairman Jerome Powell hinted that more rate hikes are coming With Bitcoin surpassing its all-time high and having more institutional investment and infrastructure than ever before, it doesn't seem to go anywhere. Another reason for Bitcoin's increase is that as the size of the mining network grows, so does the difficulty of mining, which, in turn, increases the marginal cost of producing a bitcoin. Bitcoin mining requires a large amount of energy, and this comes at a real cost that miners must pay in their local currency. Currently, there are 18.5 million bitcoins in circulation, or about 88.4% of the total Bitcoin supply.
Moya continues to see a correlation between bitcoin stocks and technology, and “that could spell problems for bitcoin. Bitcoin is the largest cryptocurrency by market capitalization and weighs more than 35 percent on CRE8, the real-time Indian crypto market index offered by CoinSwitch.
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