Bitcoin reached a new all-time high, touching $68,742 as inflation data hits a 30-year high.
The previous ATH had only occurred three weeks ago when Bitcoin hit $66,878, in the wake of the first ETF news that put Bitcoin in the spotlight once again.
On Oct. 19, 2021, the ProShares Bitcoin Strategy became the first Bitcoin-linked exchange-traded fund for U.S. investors to debut at the NYSE (New York Stock Exchange). The ETF tracks down Bitcoin futures, and in the first few hours alone after its launch, it generated more than $1.2 billion in volume.
The ETF-derived newly injected Bitcoin funds may be one of the main catalysts of this latest rise. However, many cryptocurrency experts and traders expected this upward move as significant Bitcoin chart indicators have signaled a new important run until Christmas and possibly beyond for months.
One year ago, Bitcoin was trading at around $11,500 per coin, a rise of roughly 500% mirrored in the current prices.
This new rally should not come as a surprise. The last few weeks have been prolific with good news about Bitcoin and the whole cryptocurrency market. With the recent steps ahead in adopting NFTs and the open metaverse, the cryptocurrency space has never been more attractive to investors and financial institutions.
What Is Triggering This Bitcoin Rally?
Inflation Data Jumps to Highest in Three Decades
The U.S. consumer price index (CPI), a benchmark rate that investors use to determine inflation in the country, has reached a 30-year high of 6.2%, as the Labor Department released in today's CPI report. Core inflation, which does not include food and energy, rose at a rate of 4.6%, the highest since August 1991.
This comes on the back of Federal Reserve Chairman Jerome Powell's multiple reassurance that the inflation threat is "transitionary," and could trigger the sooner-than-expected rate hikes and tapering of asset purchases by the Fed. The rising inflation expectations has led investors to a flight to "store-of-value" assets like gold and Bitcoin, with the crypto market rallying and gold prices hitting a five-month high. The rise in Bitcoin price could be attributed its appeal as a hedge against rising asset prices to investors.
The China Ban
Bitcoin has sustained a strong recovery in the aftermath of the China miners' crisis.
Claiming environmental reasons behind the move due to the enormous amount of energy consumption generated by Bitcoin mining, China pushed the industry towards other countries, including Kazakhstan (with 18% of Chinese miners relocated here) and Russia (11%). North America is the top region where Bitcoin miners relocated, with the latest data in August suggesting 35.4% of the entire industry is now US-based.
At its peak in Sept 2019, China accounted for over three-quarters of all Bitcoin mining. The Asian country’s crackdown initially pointed to a 38% fall in mining globally, CBECI (Cambridge Bitcoin Energy Consumption Index) said. The fall inevitably led to a drop in hashrate in July, with a low of 68 hashes per second (68E), the lowest level since Aug. 2019.
In July, Bitcoin price took a significant hit and dropped to $29,800, sparking fears that the bull market might have already been over for this cycle. Instead, that fall appeared to have been directly caused by the China crisis. It was inevitable that once relocated elsewhere, Bitcoin miners would have brought the production of the cryptocurrency back to its standards, also reflected in the current price. The hashrate is not back to its previous high of 179E before the China crisis, but it’s very close. Once again, Bitcoin seems to have come out of a troublesome period more robust than ever.
The upgrade is underestimated by the collectivity, with most people unaware the upgrade is even an event. However, the adoption of smart contracts will mark a milestone in Bitcoin history as it will reinforce its competition with Ethereum by enabling a new range of functionalities.
While many criticize Bitcoin for being old tech and believe other blockchains will replace it, the cryptocurrency keeps delivering significant development advances and holding its position tightly on top as a proper giant.