Cryptocurrencies hit all-time highs on Tesla investment newswritten by Bella Palmer
The surge in the price of cryptocurrencies comes amid soaring interest from both retail and institutional investors
As investors continue to react to the news that Tesla bought $1.5bn worth of the cryptocurrency, there are various options to consider before buying into Bitcoin.
A filing with the U.S. financial regulator on Monday revealed that Musk’s electric car company Tesla, has made the massive purchase of the digital asset which has jumped more than 300% in a year.
The surge in the price of Bitcoin and other cryptocurrencies, including Dogecoin – which was also fuelled by an endorsement by Musk on Twitter multiple times over the last week – comes as digital currencies become mainstream due to soaring interest from both retail and institutional investors, increasing levels of mass adoption, and as global interest rates remain at historic lows.
Nigel Green, an influential cryptocurrency expert and CEO of deVere Group, one of the world’s largest independent financial advisory and fintech organisations, says there are five fundamentals to picking the right platform in the wake of Musk’s moves within the industry.
He says: More and more people are wanting to invest into cryptocurrencies, knowing that they are the future of money. But many, even those who have extensive knowledge of the stock market, have concerns about selecting the right cryptocurrency exchange. The total capitalisation of the cryptocurrency market is now an estimated $1.2tn, but it is still lightly regulated. This means that it’s vital that investors know what to look for in an exchange.
Data presented by cryptocurrency trading simulator Crypto Parrot indicates that Bitcoin’s fees per transaction has grown at least 20 fold in the last 12 months – something for future investors to consider, following Musk’s recent investment.
The growth was recorded between February 2020 and February 2021 on a 30-day average.
In February last year, the fee was at $0.6, while on February 8, 2021, the fee was at $12.46, representing a growth of 1,976.66%. On a year-to-date basis, the fee has grown by 81.1%.
The increase in the Bitcoin transaction fee correlates with the asset’s recent surge in value. The report explores the drivers behind the rise in transaction fees.
According to the research report: The surge in the asset’s value resulted in most people buying Bitcoin in a bid not to miss out on the rally. When prices surge, more potential investors show interest in buying Bitcoin since the fear of missing out (FOMO) usually sets in. In this case, the Bitcoin blockchain often gets congested as miners compete to process the transactions leading to a skyrocketing of fees.
The transaction fees’ growth also reflects on the Bitcoin network’s total hash rate on a 30-day average. The analysis shows that the hash rate has grown from 109.7 million TH/s as of February 2020, to 151.7 million TH/s, representing a growth of 38.28% over the last 12 months. The hash rate has grown by 11.38% year-to-date.
The hash rate is the processing power of the Bitcoin network or the speed at which miners are able to perform proof-of-work calculations per second. Typically, the higher the hash rate, the more miners are participating in the network. As a result, more blocks are being mined reflecting the asset’s increasing price.
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