Bitcoin Soars: Analysts Share Insights on Bull Run’s Causes

Overview

• Nikolaos Panigirtzoglou – a global market strategist with JPMorgan – recently gave his thoughts on why bitcoin and other digital currencies are up so high since the start of the year.
• He mentioned that the banking crisis has helped Bitcoin move along, but there are other contributing factors as well, such as the launch of Bitcoin ordinals and the upcoming halving.
• He believes this is all creating a positive psychological effect in terms of price surges for Bitcoin.

Banking Crisis

Nikolaos Panigirtzoglou – a global market strategist with JPMorgan, one of the biggest finance giants in the world – recently commented on why bitcoin and several other digital currencies are up so high since the beginning of the year. He mentioned that while the banking crisis of recent months has certainly helped bitcoin move along, there are other contributing factors as well. According to Panighirtzoglou, “For crypto supporters, the U.S. banking crisis exposed the weaknesses of the traditional financial system given banks’ maturity mismatch is susceptible to bank runs. Crypto supporters have been arguing for a long time that the crypto ecosystem is superior, not least because deposits are held in entities such as stable coins which as a digital form of money market funds are 100% backed with high quality liquid assets and thus less susceptible to runs.“

Bitcoin Ordinals

Panighirtzoglou also discussed how Bitcoin’s recent launch of its own non-fungible token (NFT) series – available via its blockchain – could be another factor to attract developers to create new projects on it rather than Ethereum’s chain: „This is because metadata such as text [and] images can be inscribed on the bitcoin network itself without relying on smart contracts as seen with other blockchains where NFTs are created through smart contracts.“

Halving Effect

The strategist believes that adding fuel to this fire is Bitcoin’s upcoming halving which is scheduled for April 2024: „While this is some way away ceteris paribus, this would mechanically double bitcoin’s production cost to around $40K creating a positive psychological effect.“ This means that when halving occurs every time without fail Bitcoin experiences heavy price surges due to its production cost acting “as an effective lower bound” according to him.

Conclusion

In conclusion, it appears that many different factors have contributed towards why Bitcoin has had such an impressive run since early 2023 and these include external economic events but also internal developments related directly or indirectly from within cryptocurrency markets themselves. Events like these will likely continue to shape how prices develop over time going forward and will ultimately help give us more insight into what we can expect from cryptocurrencies in general over 2021-2022.