Per a report from the Cambridge Center for Alternative Finance (CCAF), fossil fuels have been the primary energy source for BTC mining since the start of the year. The CCAF recently updated its Cambridge Bitcoin Electricity Consumption Index (CBECI). Its study claims that 62% of all the energy the leading token has consumed so far consists of coal-based energy. BTC’s Energy-Intensive Mining Bitcoin employs the proof-of-work consensus mechanism to create new tokens and validate transactions on the blockchain. The PoW…
On December 17th, 2020, bitcoin’s price surged for a few hours, breaking its November record and hitting 23,800 US dollars, the highest unit price ever recorded. At this point, some investors foresaw an even better future, with better gains.
Ever since the inception of Bitcoin in 2009, the asset has proved to be one of the most prolific financial investments of the 21st century, paralleling other investment assets, including equity.
Due to those recent events in bitcoin’s unit price, it’s quite clear that this asset will soon replace assets like gold as investment prospects. This asset is set to out-do gold’s performance in 2021. Let’s find out why?
The DeFi World is Falling
Since September 2020, the Defi world has recorded some of its worst price records, with some top platforms like Aave and Synthetix losing half of their value. Other smaller Defi platforms have lost amounts close to 95% of their average valuation.
Although DeFi is not dead, especially considering the increasing value of the total assets locked in Defi, the price plunge has led to major losses. Most investors have shifted to bitcoin to enjoy Defi’s investment benefits while still waiting for the re-bounce.
Unlike other times since the launch of other altcoins, BTC is hosting the highest demands. This high demand, especially in the falling of alternative asset’s value, makes Bitcoin the best investment prospect in 2021, which will ultimately outperform gold.
Bitcoin is Highly Reliable Even in Crisis Times
Since BTC can act as a medium of exchange, its liquidity is higher than that of gold, most commonly used as a store of value. Considering the economic crisis that has been happening in 2020, because of the Covid-19 pandemic, all other investment options, including fiat currencies and equity assets, have been dropping.
However, bitcoin has constantly been gaining value despite the pandemic and giving investors a promise of a better tomorrow. As the world is recovering from the crisis, Bitcoin remains the best investment asset in 2021, set to outperform gold.
The Post-Halving Bitcoin’s Volatility
Bitcoin halving is a process that happens every four years meant to halve the mining rewards of bitcoin mining. This halving helps increase the coins mining process’s long-term survival and often leads to a surge in demand for these coins.
Because of the surge in demand, bitcoin’s unit prices usually rise a few months after the completion of halving. Take a look at some of the past halving years and how bitcoin’s costs behaved right after the halving and several months after the halving.
The 2012 Bitcoin Halving
2012 marked the fourth year of bitcoin’s existence and the first halving session. At the end of 2011, bitcoins price was still at 2 US dollars, and the coin was still fighting for its dominance over the US currency.
On November 29th, 2012, The bitcoin halving happened, and the aftermath was exemplary. From the period preceding the halving until the post halving period, around December, Bitcoins’ value grew to around 1BTC to $2.
However, 2013 brought good tidings to this coin’s value. The statistical analysis of the post halving era between January and April 2013 shows that the currency grew in price with an average of 5-10 percent every day. By November 2013, 1 BTC was trading at 1165 US dollars.
The 2016 Bitcoin Halving
The second bitcoin halving happened in May 2016 on the eighth year of Bitcoins life, and the coin was doing great as an investment asset. Between May and June 2016, the price of BTC was ranging between 450 and 750 US dollars.
On December 17th, 2017, BTC set a new price record at 19,783 US dollars for 1 BTC. 2017 was perhaps the most incredible year for every bitcoin investor, and the halving and the surging demand followed all these benefits.
Bitcoin Halving 2020
In 2020, Bitcoin halving happened on May 11th, 2020, another year where Bitcoin made tremendous value strides. For instance, the average unit price for bitcoin was around 8300 USD in January 2020. On May 8th, the price had grown to approximately 9,999 USD.
These values continued growing over the months until the most recent peak value of 19,950 USD, missing the 20k dollar mark by only 50 USD. Although there are many contributing factors to this price surge, BTC steady price rise is mainly attributed to the most recent mining activity, which led to a rising demand over the months.
Bitcoin halving is one of the most significant events in the crypto world, and it brings substantial profits for BTC investors. All the previous halvings have led to months of bitcoins price surge, breaking records, and increasing wealth. Since 2020 was a halving year, the BTC is already performing well, and it’s going to perform even better in 2021.
Apart from halving, other reasons will make prices of BTC grow in the coming year. Foremost is the falling Defi, which will probably bounce back after months. More investors prefer investing their wealth in BTC other than Defi coins.
Moreover, BTC has better liquidity than gold, and as such, it’s a better medium of exchange. It’s highly divisible and valuable, and those characteristics make it a better investment asset during an economic crisis. Judging from the reasons, it’s clear that BTC will be a better investment than gold in 2021.