To start with it went through $US20,000. Then 10 days later, it broke through $US25,000, and then, with hardly taking a breath, it crossed $US30,000. Now just a couple of days into 2021, the cost of bitcoin has crossed $US40,000.
Nothing’s brand new with the digital currency in the month since it crossed $US20,000 – there’s been no big change in the way it tends to be used. Although some investors are currently using the notoriously volatile currency as a “store of value,” which is usually a name conserved 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 variant 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 that focuses on blockchain technologies as well as businesses that deal with cryptocurrencies.
Media attention to the rise of its has merely extra fuel to the rally. But investors in digital currencies and companies that trade or “mine” them are warning men and women to be sceptical of Bitcoin’s the latest rise and to be braced for a lot of volatility.
It’s been an untamed ride for bitcoin the previous 3 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 price for the currency.
Well then it all evaporated. The currency’s value plunged sharply in 2018, and by December of that season Bitcoin was worth less 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 2 years companies have embraced the technology that underlies digital currencies like Bitcoin, a concept called the blockchain, the particular uses for Bitcoin haven’t truly changed since the rally of its three years back. It is nonetheless mostly used by those distrustful of the banking system, criminals seeking to launder cash, and for the most part, as a 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 at the same time.