If you want to get your hands on some Bitcoins and see them explode beyond the expected $ 100,000 or $ 300,000 threshold by the end of 2021, you are not alone.
The phenomenal rise in Bitcoin prices has caught everyone’s attention. From billion dollar investment firms to local moms and pop shops, everyone wants a share of Bitcoin. If you know a little about Bitcoin, you will know that the real appeal of it as an asset is due to its limited availability.
There are 21 million Bitcoins in total. Of the same, up to December 2020, nearly 18 million have already been mined and owned. In this article, we discuss an issue that many exchanges and trading platforms are experiencing: a shortage of Bitcoin on the open market!
What is contributing to the Bitcoin liquidity crisis in 2021?
In the introductory section, we hinted at how the finite nature of Bitcoins means they run on the classic supply-demand model. The confidence shown by investors means that this asset base is becoming expensive.
However, besides the above, there are other reasons for the liquidity squeeze in Bitcoin.
The future of money in the world
Bitcoin has the promise of creating an egalitarian financial system, which would allow the entire population to be able to “own” their money in real terms. Try to escape the control of the same from the hands of governments and politicians and make it truly independent.
No intermediaries or commissions
More than a trillion dollars were paid in commissions to banks, payment gateways and financial companies by individuals and businesses in 2020. With Bitcoin, that number would drop to zero. It means an extra trillion dollars would be pumped into the economy.
Loss of value and interest in Fiat currencies
The collapse of oil brought the dollar to its knees. Without stable physical support and rising inflation, fiat currencies have proven their true worth. Financial mismanagement and economic mismanagement mean that people no longer have faith in traditional monetary systems.
The rise of a digital world
Work, entertainment, health, food, transportation, etc. They are all driven by digital adoption. Money has also seen an increase in digital patterns and cryptocurrencies like Bitcoin will be the natural evolution. As an investor, you should understand the ecosystem and how it works.
Incompetent world leaders
The competence that led to the creation of strong world economies has been replaced by inability and incompetence. Failure to initiate and strengthen economies means that the common individual is too dependent for his life on a representative who will fail them.
How are changes in Bitcoin investment styles adding to the liquidity crisis?
“HODLing” is a term that every investor needs to know in the Bitcoin investment ecosystem. The term is a misspelled word for Bitcoins and allowing them to raise prices. The sudden increase in the number of institutions and institutional investors has meant that people are no longer willing to sell Bitcoin for immediate gains.
Previously, retail investors would have made a small profit and then sold off their investments for fear of them crashing. The recent maturity in investment models and styles means that fluctuations are on the decline and are expected to steadily increase.
This adds to the liquidity crisis once again as there is not enough Bitcoin available with exchanges, trading platforms or any investment https://bitcoin-profit.it/. People are starting to invest in Bitcoin and other cryptocurrencies the same way they do real estate, invest and forget!
The largest cryptocurrency exchanges claim that there is not enough Bitcoin for everyone. The non-availability of mining platforms to mine Bitcoin also means that miners are unable to produce enough. Ultimately, it can be safely said that the growing interest in owning and keeping Bitcoin will add to the rarity and liquidity constraints.