The May halving seems to have gained maximum momentum as Bitcoin bested its previous 2017 record of $19, 783 to finally breach the $20,000-mark. The latest price surge came on the back of an over 5% increase in Bitcoin’s value in the last 24 hours. At the time of writing, Bitcoin was comfortably seated at $20, 505. However, as Bitcoin goes past $20000, there are several factors that need to be considered that might have led to this rise.
While the current rally is quite exceptional, it also has an element of déjà vu as it was precisely at this time three years ago when the world’s first currency came well within the range of the $20,000-mark, only to tumble down spectacularly within a matter of days.
What’s Behind this Latest Surge?
A major reason behind this latest price surge could be attributed to the spike in its demand at a time when there are significantly few Bitcoins to purchase. Although the overall supply of Bitcoin keeps growing each day as more and more Bitcoins are mined, the actual number of Bitcoins that are available for purchase is heavily dependent on whether the holders’ wish to sell or trade it.
Although Bitcoin has gone beyond the value it had achieved during the 2017 bull run, the amount held in liquid wallets is much higher and represents 77% of the almost 15 million mined Bitcoin. This suggests that it hasn’t moved from its current address in over five years, which means that buyers only have a pool of 2.4 million Bitcoin that they can purchase from.
How’s this Surge Different from the 2017 Rise?
As Bitcoin goes past $20000, it’s worth pondering upon how this rise is different from the 2017 price boom. The 2017 price hike was fueled mostly by demands from individuals and retail investors who used their personal funds to purchase Bitcoin. However, institutional dollars came knocking in 2020. This included high-profile investors like hedge fund manager Paul Tudor Jones, who likened Bitcoin purchase to an early investment in Google or Apple. This underlines their desire to hedge against macroeconomic uncertainty, suggesting that investors have become more strategic and buy Bitcoin to fulfill a specific use case instead of speculating on a new hot asset.