Bitcoin price resilient due to 3 factors.
- The SEC has filed lawsuits against Binance and blockchain
- The price of Bitcoin remains strong despite the challenges
- Bitcoin’s scarcity, halving inflation rate, and an increase in users are helping its resilience
Once again, cryptocurrency investors are being put to the test. In a span of 24 hours, several events have challenged the market yet again.
First, Binance, one of the largest cryptocurrency exchanges in the world, was sued by the Securities and Exchange Commission with thirteen charges. Second, blockchain was also sued by the same authority for operating as an unlicensed broker in the US.
Furthermore, the SEC has filed court documents to freeze Binance’s US assets. Given the importance of these two players for the industry, it is surprising that the price of Bitcoin remains strong. Here are three reasons that may explain its resilience:
- Scarcity
- Increased number of holders
- Halving inflation rate
Scarcity
The upper limit of supply is mathematically fixed at 21 million. This scarcity makes Bitcoin attractive to many investors as it is like a digital store of value.
- Twitter CEO says Ethereum is a security. Will this impact prices?
- Volcano Energy, a Bitcoin miner from El Salvador, launches with a $250M investment.
- Zion Social Network now accepts Bitcoin payments through the Lightning Network for secure messaging with instant transactions.
The number of users/holders increases
More and more people are using or holding Bitcoin. Despite the industry constantly being challenged by fraudsters or lawsuits, the number of users and holders has increased considerably over the years.
Halving inflation rate
By April 2024, Bitcoin’s inflation rate will be halved again. This means that it will be lower than that of gold, making it an attractive asset for those looking for a hedge against inflation in times where inflation has reached alarming levels, even in developed countries.
