Yerevan (CoinChapter.com) — Bitcoin crossed the $63,000-mark on Tuesday.
The benchmark cryptocurrency added $4,024, or 6.74 percent, to reach a new record high of $63,774. Its move upside came as a continuation to a rally that has survived for more than 12 months already. Back in March 2020, the BTC/USD had dropped to as low as $3,858 amid a coronavirus pandemic-led global market rout.
Later, the Federal Reserve introduced an open-ended bond-buying program, stating that it would purchase government debts and mortgage-backed securities at the rate of $120 billion per month. Meanwhile, the US central bank slashed interest rates to near-zero, ensuring cheaper liquidity for borrowers.
The pandemic-led lockdown also prompted the US government to launch stimulus programs. The Donald Trump administration passed two bills worth $2.1 trillion and $900 billion each that provided direct benefits to Americans. Meanwhile, the Joe Biden office stepped up the government spending by introducing and passing another aid, this time worth $1.9 trillion.
While the measures helped contain an impending recession, it also led to lower interest rate returns on government bonds and a depressive US dollar trend due to additional liquidity. On the other hand, Bitcoin emerged as an alternative haven for many investors because of its limited supply of 21 million tokens. Many believed the cryptocurrency would protect their portfolio from impending inflation.
Billionaire hedge fund managers Paul Tudor Jones and Stan Druckenmiller allocated a small portion of their wealth in Bitcoin. Later, MicroStrategy announced that it had added $1.03 billion worth the cryptocurrency to its balance sheet. The Nasdaq-listed business intelligence firm kept adding more BTC to its reserves. Its last purchase was in April 2021, which upped its bitcoin collection to 91,579 BTC, worth $2.26 billion at the time of investment.
All of that happened in 2020. Bitcoin closed the year 308 percent higher. The new year also brought more mainstream investors to the cryptocurrency market. US carmaker Tesla added $1.5 billion worth of BTC to its reserves, followed by the introduction of a bitcoin checkout option for its electric cars. Payment company Square, which had also invested $50 million in Bitcoin in 2020, upped its exposure by another $170 million in 2021.
Bitcoin Adoption Booms
The service industry also joined the party. Banking giants Morgan Stanley and Goldman Sachs announced bitcoin-enabled investment services for their wealthy clients. PayPal first introduced bitcoin buying/selling/storage services. It later expanded the service to include a crypto-checkout option, enabling users in the US to pay for goods and services in BTC.
Amid all the development, the Fed kept its rates near zero and continued buying bonds as it was. Investors remained convinced about further rally in the Bitcoin market due to higher inflation forecasts. Many firms filed for a Bitcoin exchange-traded fund. And calls for regulation of cryptocurrencies in the US became louder.
Welcome to the birth of a new asset class.