Why is crypto increasing? There are plenty of reasons

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Long and short term Bitcoin (BTC) and Ethereum (ETH) holders rejoice. Bitcoin broke through its resistance point and crossed the $ 50,000 mark for the first time since last May. And Ethereum is rapidly approaching its all-time high. Nevertheless, many investors are asking the question: why is crypto increasing? The short answer is that a rising tide lifts all boats. And the long answer isn’t much more complicated.

Ethereum has been on an absolute tear since activating its London hard fork. At the time, it was trading around $ 2,600 a coin. Since then, its value has increased by almost 50%. And there are several reasons for this.

For starters, upgrading the software to the Ethereum blockchain has slowed the rate of supply at which Ethereum is growing. In any market where supply is slack, you should expect the value of the underlying commodity to increase. And in the case of Ethereum, this has been intensified by the fact that demand is on the rise.

Remember back in May when the Colonial Pipeline was hacked and the threat of a fuel supply led to panic buying… which led to price hikes? It is a bit like that. Only in the case of an increase in the value of Ethereums is there no panic buying. It’s just more and more important.

The Ethereum economy has exploded with increasing interest in the NFT (Non-Fungible Token) market. But it’s not just Ethereum’s outsized role in NFTs that has propelled it higher. In addition to this, the number of crypto-based lending, savings, and trading apps has also grown rapidly. And that’s good news for Ethereum as well. But that’s not the only answer to the question, why crypto is on the rise.

Why is crypto increasing? Ask institutional investors

Payment companies like Square (NYSE: SQ) are working towards a decentralized finance (DeFi) business model. Then there are the Wall Street giants like BlackRock (NYSE: BLK) and JP Morgan Chase (NYSE: JPM). Before the crypto boom in 2020, institutional investors accounted for less than 10% of all DeFi trading volume. In the second quarter of 2021, they represent 60% of this volume.

Big boys are really interested in crypto these days. This will probably make the prices even more competitive in the future. And of the two biggest coins, Ethereum is getting the most attention from traders… At least for now.

Then there was an announcement that went under the radar of many crypto traders. A group of some of the major Ethereum-based DeFi projects have come together to form a global crypto organization with the goal of bringing DeFi to six billion smartphone users worldwide. While partnerships built around decentralizing something may seem like an oxymoron, in this case, it seems to make a lot of sense. And this is yet another catalyst behind the question of why crypto is rising.

This project, called DeFi for the People, connected people like Aave, SushiSwap, Curve, PoolTogether, and Celo to help spread awareness of DeFi through $ 100 million in grants and incentives. And it couldn’t have come at a better time. El Salvador just became the first country to adopt cryptocurrency as legal tender… And things didn’t exactly go perfectly.

Is El Salvador ahead of the curve?

For the uninitiated, the first steps towards understanding and using cryptography can be a chore. But if a group of exaggerated bankers can find out, there is no doubt that the Salvadoran people will eventually find out as well. Especially when he’s lucky enough to save them so much money.

The adoption of crypto in El Salvador could finally give Salvadorians access to financial services that less than 65% of the country, according to the latest figures, currently have. On top of that, the widespread adoption of crypto could help those in El Salvador save $ 400 million in transfer fees. This is a huge change for a country that is one of the poorest in the Western Hemisphere. For reference, the gross national income per capita in El Salvador is around $ 4,000.

However, for digital currencies to work, connectivity is essential. Almost half of the population does not have the Internet. And even more have only sporadic access. All of this will make widespread adoption difficult. Then there’s the fact that Salvadorans are somewhat wary of the characteristic volatility of crypto.

Nevertheless, the plan is underway. Before the release of the Chivo digital wallet (which encountered some problems), the country bought 400 bitcoins. This represented an investment of about $ 20 million for the country. The decision was made in order to give everyone who downloads the wallet $ 30 in Bitcoin. This gave a nice little increase in the value of Bitcoins along the way. And is yet another answer to the question of why crypto is on the rise.

Why Crypto Is Going Up: The Bottom Line

As we pointed out earlier, crypto is the very definition of a headline-driven marketplace. And lately the headlines have been good. They were the kind of headlines that pushed Bitcoin up 275% in value last year.

But it’s worth remembering that in recent years Bitcoin has lagged behind the competition. She was clearly one of the leaders in attracting investment money. But it is far from providing the biggest return. This price goes to AAVE which reached 9500% last year. So, when it comes to the question, why is crypto rising, there are a lot of reasons. But it takes a lot more examination to find the tokens that are about to go up the most.

If you are looking for the next token to take the crypto world by storm, we suggest you sign up for Manward Financial Digest. In it, Andy Snyder helps guide new and seasoned investors through the crypto markets to find investment opportunities that best match their portfolio and risk tolerance. All you have to do is enter your email address in the box below to get started.

About Matthew Makowski

Matthew Makowski is Senior Research Analyst and Writer at Investment U. He has studied and written about the markets for 20 years. As comfortable with identifying value stocks as he is with discounts in crypto markets, Matthew started mining Bitcoin in 2011 and has since focused on cryptocurrency markets as a whole. He is a graduate of Rutgers University and lives in Colorado with his dog Dorito.

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