Bitcoin Passes $50K After a Tumultuous Summer
The summer of 2021 was a tough one for cryptocurrency. But recent efforts to legitimize the industry through political action and big-name endorsements have tipped the market back up again in recent days.
Bitcoin (BTC-USD) passed the $50,000 mark on Sunday, August 22, around 10:40 pm Eastern time. The valuation was the highest for Bitcoin in over three months since it hit an all-time high of $64,000 in April.
As of Tuesday afternoon, Bitcoin’s value had receded to a little over $48,000. But the psychological impact of re-hitting the $50,000 threshold has nonetheless cemented a new momentum for the crypto business.
Crypto’s Lackluster Summer
The resurgence of Bitcoin signals a rebound for the entire crypto industry after an uninspiring three-month slide.
After Bitcoin hit its all-time high in April, the cryptocurrency experienced a drastic sell-off in June and July. Trading volume at major crypto exchanges declined by nearly 50%. Bitcoin’s value slid to under $30,000 at one point during this period.
The reasons for the decline were many, but the most cited one involved the Chinese government’s scrutiny on Bitcoin mining operations. Many of these businesses opted to shut down or move in response to the pressure. Operations slowed down considerably as a result of the efforts.
Similarly, U.S. crypto operations experienced some nervousness about a crypto tax reporting provision in the bipartisan infrastructure bill currently progressing through Congress.
Although efforts to amend the provision to exempt certain parties on the blockchain from reporting were made, the U.S. Treasury reportedly will not target non-financial intermediaries for transaction reporting requirements.
Behind the Rebound
Two major announcements may be the biggest factors behind the cryptocurrency bounce-back.
Last Friday, Crypto exchange Coinbase (NASDAQ: COIN) announced the company would buy $500 million in cryptocurrency on its balance sheet and allocate 10% of its quarterly profits into its crypto assets portfolio going forward.
Coinbase executives claimed in a blog post that it’s “the first publicly traded company to hold Ethereum, Proof of Stake assets, DeFi tokens, and many other crypto assets supported for trading on our platform.”
Industry insiders credited the Coinbase announcement for kickstarting the Bitcoin advance.
Additionally, on Monday, online payment service PayPal (NASDAQ: PYPL) announced it was launching its new cryptocurrency service in the United Kingdom, expanding the offering that’s been available in the U.S. since October.
Celebrity Endorsements and Political Sway
The latest market boom also validates the advocacy of high-profile crypto investors who are working to legitimize the cryptocurrency market through political action.
Tesla founder Elon Musk, Twitter CEO Jack Dorsey, and actor Ashton Kutcher made public statements supporting the congressional clarification amendment over the summer. The political action dovetailed on the long-time crypto investors’ persistent support of the currency.
Indeed, the mere inclusion of the crypto tax provision — even in its imperfect form — indicates that American leaders believe cryptocurrency is established enough to warrant legislative attention.
Investors may take that as a sign that crypto is here to stay, which means many are ramping up their speculation.