Crypto’s price surge was mostly due to limited information – here’s why

As the world becomes more and more digitized, the usage of one of the most popular cryptocurrencies, Bitcoin rapidly grows. In recent years cryptos became the rising stars of the currency market of the world.

Because of the related advantages like making transactions anonymously or ensuring security while trading or gambling online, the number of crypto users increases daily. Therefore Bitcoin frequently gets at the center of attention for finance experts all over the world. 

Currently, the most important news regarding cryptos is about its price surge which is the main subject of discussions in financial markets. Experts are trying to identify the reasons for Cryptos price surge and they have been mentioning appointing to various theories while discussing the possible basis.

As latest data suggests, the price of bitcoin hasn’t been so high in about the previous two years and this is why investors are looking for fresh reasons to feel hopeful for the asset. 

Usually, Bitcoin is widely known for its volatility but recently the digital currency has been strangely quiet. From August 2020 it had been hovering between 9000 and 10 000 USD but now in the past week, Bitcoin saw a sudden breakout.

In fact, last week the price of the digital currency rose to $11 000 which is by 25% more compared to last week’s rate. And this change is really notable because Bitcoin never stayed above $10 000 for so long and hasn’t even crossed $10 500 this year at all.

All over the last year, it struggled to stay over $10 000 and now everybody can see clearly the success it goes through. 

What is driving the new price surge?

There doesn’t seem to be only one certain reason for the current situation but most likely it is a consequence of the various factors that are overlapping each other.

But as experts believe one of the main reasons for this may be limited information. Today knowledge of any financial asset is vitally important for making the right decision when it comes to finances.

Making financial decisions is getting more and more complex and people start to talk about the importance of financial literacy. Specifically, understanding various financial areas and topics related to managing personal money and investing is essential for managing retirement accounts, trading personal assets online, or carrying debts but statistics show only about 35% of the US citizens show financial literacy. 

We can clearly see that in any person’s risk management strategy, market knowledge is always at the highest tier of importance. That is also the case with the traditional financial market.

This tendency soon translated into company approval as well. For example, we can look at the Axiory trading academy as a staple feature on any modern forex platform as they give us important guides to get to know how to manage risk when trading forex.

Reasonable traders should know how to maximize their potential gains and reduce their losses as much as possible. For this, they need to avoid the use of high leverage and not investing more than 2% of trading capital in a single trade.

Besides, they should choose an effective risk-reward ratio according to the strategy they use and also, avoid the currency pair with the strong correlation that usually increases risks.

But of course, many other factors need to be considered and this is why people taking part in fx trading try to gain more insights about what technical indicators to use when trading and how to use various strategies to make the increase possible benefits. 

All these things are pretty important for financial literacy. For example, in 2017 BTC rose in price because everybody simply saw it growing and wanted to grab a big piece of pie but nobody really knew why it was growing.

But realizing the basic reasons for every single financial event is vitally important for maintaining current success and in general, for the correct decision-making process. Therefore, not knowing the underlying factors of this rise was the reason why it fell down afterward. 

Did PayPal impact Bitcoin’s price surge?

According to CNN another great reason for the price surge of Bitcoin can be attributed to PayPal which recently jumped into the cryptocurrency business.

The online payment system launched its own cryptocurrency service which is now accessible to buy, hold, and sell on its website. As the company believes, adding crypto to its service was a significant step to the general process of the cryptocurrencies’ adoption.

This is exactly what Bitcoin investors think because as a result, the prices rose by 5% in the last week. PayPal executives believe that the shift from physical to digital currencies was something inevitable and this is why they decided to implement the new idea so quickly. 

The new digital currency introduced by PayPal will give people the opportunity to use the company’s digital wallet to shop online, request and send money and also, to exchange BTC and other cryptos.

PayPal’s US users will have the ability to receive this new crypto service in the coming weeks but as the initiative hasn’t yet been fully implemented, they won’t be able to pay for products and services by this digital currency until the following year. However, the international customers of the company won’t be eligible to use this cryptocurrency until the first quarter of 2021. 

It’s important to mention that investors have positive predictions about the news as the stock price of PayPal surged after launching this new initiative. And even more, after the beginning of the coronavirus pandemic, the stock market of the company doubled in the United States.

Therefore, apart from the limited information, this can also be an important reason for the current price surge of cryptocurrencies.

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