To begin with it went through $US20,000. Then 10 days later, it broke through $US25,000, and then, with seldom taking a breath, it crossed $US30,000. Now merely a couple of days into 2021, the price of bitcoin has crossed $US40,000.
Nothing’s new with the digital currency in the month since it crossed $US20,000 – there is been no major change in how it is often used. While many investors are currently utilizing the notoriously volatile currency as a “store of value,” which is usually a name saved for safe haven investments as gold and other precious metals.
“Will you be ready to buy a cup of coffee with bitcoin? Probably not with the current variant of Bitcoin. It’s largely turn into a market of value,” said Mike Venuto, a co-portfolio director of the Amplify Transformational Data Sharing ETF, a $US391 million ($503 million) exchanged traded fund that focuses on blockchain technologies and businesses that deal with cryptocurrencies.
Media attention to its rise has just added fuel to the rally. But investors in digital currencies and firms that trade or “mine” them are actually warning people to be sceptical of Bitcoin’s recent rise and to be braced for a lot of volatility.
It has been a crazy ride for bitcoin the last three years. The digital currency made its big Wall Street debut in December 2017, when the major futures exchanges rolled out bitcoin futures. The focus drove Bitcoin to roughly $US19,300, a then-unheard of selling price for the currency.
Well then it all evaporated. The currency’s value plunged sharply in 2018, and by December of that year Bitcoin was really worth lower than $US4,000 a coin. Up until this most recent rally which began in October, Bitcoin typically floated between $US5,000 and $US10,000.
While in the last two years businesses have embraced the technology which underlies digital currencies like Bitcoin, a principle known as the blockchain, the particular uses for Bitcoin have not truly changed after its rally three years ago. It’s nonetheless largely used by those distrustful of the banking system, criminals seeking to launder cash, and also for the vast majority of part, as a department store of value.
The truth is, other investments typically used as safe havens throughout uncertain times – notable valuable metals – have been trading at near record highs also.