Recovering from crackdowns and uncertainties, cryptocurrencies have rallied back to reach the $2 trillion market cap they were once at in April, earlier this year. The recent rally is led by Bitcoin whose value reached $48,152, the highest since May 16, Bloomberg reported.
Beginning with the last quarter of 2020, cryptocurrencies saw a dramatic rise in acceptance, and their values against the U.S. dollar have soared. Value of ether, a derivative of the blockchain platform Ethereum, that supports other cryptocurrencies and Non-Fungible Tokens (NFTs), had also then seen a rise along with Bitcoin that accounted for 50 percent of the market cap. Together, cryptocurrencies are bringing in Decentralized Finance (DeFi), a way to carry out transactions without involving the banks.
Government institutions were not happy about being sidelined and heavy crackdowns were ordered against cryptocurrency operations, which are considered illegal in most countries. Cryptocurrencies also face flak for the amount of energy they consume for their transactions, prompting companies to stop accepting them, leading to a drop in their value.
After much opposition, banks seem to be warming up to cryptocurrencies and even consider them valuable assets to hold. As other countries also move to adopt crypto coins as legal tender and innovate on ways to make them sustainable, the trust in cryptocurrencies continues to grow and was reflected when the coins reached their previous best market cap, in just four months after heavy crackdowns.
While the earlier rally was fueled by individual adopters, the recent one is likely the result of institutions willing to increase their exposure to the crypto trade. Wealth management firms have acquired sizable shares in Grayscale Bitcoin Investment Trust, Finder reported. Over the last couple of weeks, the capitalization of cryptocurrencies has increased by $700 million, the website reported.
Interestingly, apart from Bitcoin and Ether, other cryptocurrencies are also making their presence in this gain. Cardano, the third most popular cryptocurrency has gained 47 percent value, Binance Coin has gained 14 percent, XRP has moved up 61 percent, while even the satirical Dogecoin has grown 18 percent in the past week, Bloomberg reported. This growth has not been dampened by the failure of the industry to change crypto tax reporting rules in an infrastructure bill in the US Senate.
As one cryptocurrency expert had predicted earlier this year after a dip, Bitcoin could reach $100,000 value later in 2021. And we will keep an eye out for that.