To begin with it went through $US20,000. Then 10 days later, it broke through $US25,000, and then, with rarely taking a breath, it crossed $US30,000. Now just a few days into 2021, the price of bitcoin has crossed $US40,000.
Nothing’s new with the digital currency of the month since it crossed $US20,000 – there is been no major change in how it tends to be used. Even though some investors now are using the notoriously volatile currency as a “store of value,” that is traditionally a title saved for safe haven investments as gold and other precious metals.
“Will you be ready to purchase a cup of coffee with bitcoin? Probably not with the present version of Bitcoin. It’s mainly become a market of value,” said Mike Venuto, a co-portfolio manager of the Amplify Transformational Data Sharing ETF, a $US391 million ($503 million) exchanged-traded fund which focuses on blockchain technologies as well as firms that deal with cryptocurrencies.
Media attention to its rise has merely extra fuel to the rally. But investors in digital currencies as well as businesses that trade or even “mine” them are actually warning individuals to be sceptical of Bitcoin’s recent rise and also to be braced for a great deal of volatility.
It’s been a crazy ride for bitcoin the previous 3 years. The digital currency made its big Wall Street debut in December 2017, when the key futures exchanges rolled out bitcoin futures. The attention drove Bitcoin to roughly $US19,300, a then unheard of cost for the currency.
In that case all of it evaporated. The currency’s value plunged sharply in 2018, and by December of that year Bitcoin was worth lower than $US4,000 a coin. Up until this most recent rally which started in October, Bitcoin generally floated between $US5,000 and $US10,000.
While in the last two years companies have embraced the technology that underlies digital currencies as Bitcoin, a concept known as the blockchain, the particular uses for Bitcoin have not really changed after the rally of its three years back. It is still mostly used by those distrustful of the banking system, criminals seeking to launder money, and also for the most part, as a store of value.
In fact, other investments usually used as safe havens during uncertain times – important valuable metals – have been trading at near record highs as well.