Bitcoin’s recent price surge to the $13,000 caused a lot of excitement and apprehension as well. The current Bull Run shows a marked difference from the coin’s 2017 price action when another parabolic advance happened.
The celebrations from confident investors are loud as the coin gains a whopping $9,000 BTC/USD gain in three months when BTC surged past $13,000. The critics are, however, coming out of the woodwork to trigger worry about the sharply rising prices. Nevertheless, pundits claim that despite the welcomed $9,000 leg-up, the digital asset is still reasonably priced.
Tracy Alloway, a Bloomberg London journalist for instance, tweets:
“Bitcoin remains fairly valued according to my avocado-based pricing model, even after rising past $11,000.”
Alloway is the mind behind the BTC price index based on avocados. The comparison is not tongue in cheek. As per her analysis, BTC’s prices seem to mirror the price of Hass avocados.
The Bitcoin-Avocado Correlation
Consequently, as the king of crypto’s price soars, so does the value of its rough-skinned delicious counterpart. Crypto followers began to notice the bizarre phenomenon in late March, but the mirrored prices of the two items have been in existence for over a year. Begs the question however why Tracy Alloway correlates the fair value of Bitcoin to the guacamole making fruit.
Jen Zhu Scott, a crypto-entrepreneur, agrees in this tweet of the correlation between m, prices of BTC and that of avocados when it comes to US data especially. The US imports at least 1.7 billion pounds of avocados annually from Mexico.
Over 21 million of these fruits are consumed each hour in the US Millennials have a penchant for the creamy produce, loading it on everything from toast to smoothies. They also love Bitcoin and are a large part of the investor group pushing the Bitcoin price. As per CoinDance data, 57.29 percent of the token’s community engagement is millennial. The key player in both markets, hence, is the millennial, and their interest in the token is not waning.
When President Trump announced new immigration measures against Mexico, the prices of the fruit went on a tear as grocers began to hoard their supplies. According to Mati Greenspan, the embargo news by Trump gave avocados a 35 percent hike. The rising Bitcoin prices have also been linked to the economic and political fires Trump is lighting globally. When he, for instance, said that he was going to close the US-Mexico border, Bitcoin’s price surged.
Prices Reflect Scarcity
The China- US trade tensions have also fueled the current crypto bull run. With calls made to the US Federal Reserve to cut down on interest rates, Wall Street investors are beginning to turn to other investment alternatives to hedge against a weakened dollar. The top offerings of choice have been gold and Bitcoin.
The avocado price hike, nonetheless, is temporal. Once the market floods itself, their prices will tank. The Bitcoin supply, in contrast, cannot change. There are 21 million coins in total, and 80 percent of this amount has been mined.
Besides, the upcoming 2020 Bitcoin halving event will reduce the mining reward of the token by 50 percent, which is a measure designed by Satoshi to curb the inflation of the digital asset. Unlike avocados, Bitcoin has permanent scarcity working for it, which means that its high prices are not only sustainable but will keep pumping as awareness builds.
Besides, there is also the rising demand for Bitcoin from Asian markets, with the Kimchi Premium, for example, making a comeback. The Bitcoin network’s hash rate is at an all-time high, signaling sustained price gains. The flood of institutional investment is also exemplary. The current Bitcoin price surge is going on despite the SEC’s move to delay any Bitcoin ETFs. Perchance, the SEC approves the said ETF, the sky is not going to limit the current bull run.