Ever since its inception in 2009, Bitcoin had different periods of popularity and notoriety. While it was relatively unknown up until 2012-2013, the asset became more and more talked-about in the years leading to early 2018, when the infamous “crypto winter” started. Since then, with a few years of bearish market trends, Bitcoin (as well as the rest of the cryptocurrency market) has started regaining the spotlight in early 2021, and has been dominating the headlines ever since.
What were the catalysts for this phenomenon? While some will point fingers at the infamous Reddit GME and AMC stock acquisition by the individuals of the r/WallStreetBets subreddit, others will tell you that it’s all about the “meme economy”, and that Elon Musk spearheaded the crypto popularity trend with its tweets.
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Naturally, there are many different factors that contributed to the fact that BTC (and crypto, in general) is as popular as it is today. However, one would dare to argue that the major catalysts for this were institutional investments, and the fact that BTC has become so mainstream, that even national governments have started using it as legal tender.
In 2021, Bitcoin has experienced something unprecedented – it was named as legal tender in El Salvador. The news sent shockwaves around the world, and renewed the discussion of crypto going truly mainstream.
This, however, is only true for anyone who hadn’t been following the crypto space up to that point in time. If you were to look into the news surrounding BTC in the months leading to El Salvador pronouncing it as legal tender, you would have seen another phenomenon – large corporate entities investing in the asset, and putting it on their balance sheets.
One of the most notable of these investments was that of Tesla. The company bought Bitcoin as part of their balance sheet asset diversification, and also made their cars available to be purchased for BTC. While this was short-lived, it was still the first huge move that prompted other corporate giants to turn their sights towards Bitcoin.
By now, there are countless corporations, FinTech companies, and even governments that are either invested in BTC, or are currently pondering on doing so. While this is huge news for anyone claiming mass adoption, it does pose a significant risk, too – that of centralization.
While the masses are cheerful, there are critics that are fearful that this huge attention that BTC has gained will lead to the cryptocurrency becoming increasingly more centralized. This is due to the buying power that governments and large corporate entities have, when compared to the average retail investor.
One must not forget the lack of regulatory clarity within the space, as well. Major governmental entities such as the SEC and the IRS have been turning their sights towards the space – it’s only a matter of time before regulation hits the crypto market, as a whole. As of now, though, there’s no real certainty on what these regulations will look like, and how much they will favor retail, corporate, and governmental investors in the space. by Aaron S. – Expert Reviewer, BitDegree