Unless you have been completely disconnected from the internet and news stations it is safe to say you have at least heard in passing that Bitcoin has gone on a tear this last week. This comes after a time where there was some stagnation and pullback as Bitcoin really took a breather from the incredible price run it had been on all of 2020 and the beginning of 2021. It is important though to understand different economic factors that are in play for this to occur. Before I continue though please note I am not a financial advisor and never risk money you cannot afford to lose. That being said what has happened?
Globally
Last week the news broke that El Salvador was finally mining Bitcoin from electricity generated from volcanos. While the headline is very popping what they are doing is mining via geothermal electricity resulting in what I have heard called "green" bitcoins. This is great in that it lessen the idea that mining Bitcoin is bad for the environment. This also will allow a country for the first time to mine a crypto for itself to build up their own Bitcoin Reserves!
The Federal High Court in Nigeria as well gave the final approval for the central bank in Nigeria to roll out the eNairo. This is Nigeria CBDC and promises to be a cheaper faster alternative form of payment like blockchain is supposed to be. Nigeria is one of several countries in Africa who have experience huge growth in the crypto community and this is a fantastic thing to see!
In China there is currently a property bubble that is bursting right now and property developers are missing loan repayments of hundreds of millions of dollars. What was initially just the second largest developer Evergrande missing payments and now Fantasia also missing a $200 million USD loan repayment. Since China has once more upped its ability to crack down on crypto and Bitcoin its hard to know what effect this is having on the price. I personally thing that this is on the smaller side of causing the price to increase but it is a factor still.
United States
The US has also been a huge helper in driver the cost as well. Since it is seen as digital gold by most people still that would make it a hedge against inflation. With the government in the current state that it is possibly spending over $11 trillion USD this year inflation is a huge growing concern. The combination of this massive spending with the possibility of a default of the American Government has made the finance markets a little shakey. In turn this has lead to massive gains and losses in the stock market without much cause for such this.
