The price of Bitcoin has been rising of late. Reaching the $60,000 level again is proving difficult though.
March 21 has seen its price go below $56,000 so that $60,000 level is further away than it was a few days ago. It had reached $61,000 at one stage but slipped back again. Just why is Bitcoin finding it so hard to reach that higher figure? There are a few reasons that could be causing this.
One is the recent rise in Treasury yields in the US. Risk is a key word in the financial world. Despite the increases that have been seen in the price of Bitcoin, it could easily fall in the future. We do live at present in a rather insecure world and heaven knows what could be around the corner.
Higher Risks
US treasury bonds are rising in value, so the desire to place funds into an asset that has higher risks attached isn’t so attractive. That’s backed up by comments from Welt market analyst Holger Zschaepitz. His view is that treasury yields will continue to rise in the future as the American economy continues to recover. Treasury 10-year yield figures have gone above 1.7%, the best record since January last year.
It’s not just Bitcoin that has seen its value drop in recent days. The only exception to the situation seems to be Ripple which has seen an 8% rise to just over $0.51.
The $56,000 Bitcoin value is a bit of an improvement after slipping to $53,200 at one stage in recent days. Another reason is in the number of Bitcoin whales that have at least 1,000 coins. This figure has seen a sudden decline to 2,270. That’s compared to the middle of last month when the figure was over the 2,500 mark.
Bank of America Report
The Bank of America have published a report on Bitcoin, and it isn’t all good news for the cryptocurrency. Their view is that in the future, it may be replaced by Central Bank Digital Currencies (CBDC). This has been happening in countries such as the United Arab Emirates and China. Such moves could lead to the use of cryptocurrencies being restricted. This would have a massive affect on the price of Bitcoin.
The report also states that Bitcoin remains too volatile. The drop seen this week backs that opinion up. It also mentioned the large swings in Bitcoin price this time last year when the pandemic went into overdrive. The view of the report is that the volatility of Bitcoin is larger than for gold or silver.
They also have concerns over the number of transactions that take place each day, around 300,000 a day. Not quite the 236 million figure for Visa. The opinion is that the network speed of Bitcoin will always be capped due. This doesn’t take into account the difference in the transactions between the two.
An interesting time lies ahead therefore. Reports such as the one from the Bank of America can be damaging. More positive news and support given to the cryptocurrency are needed for the value of Bitcoin to again increase.
