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. At this point only a couple of days into 2021, the price of bitcoin has crossed $US40,000.
Nothing’s brand new with the digital currency of the month since it crossed $US20,000 – there’s been no big change in how it may be used. While many investors are now using the notoriously volatile currency as a “store of value,” that is usually a name kept for safe haven investments like gold as well as other precious metals.
“Will you be in a position to buy a cup of coffee with bitcoin? Probably not with the present model of Bitcoin. It is mainly become 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 as well as businesses that deal with cryptocurrencies.
Media attention to its rise has merely added fuel to the rally. But investors in digital currencies as well as businesses that trade or even “mine” them are warning people to be sceptical of Bitcoin’s the latest rise as well as to be braced for a great deal of volatility.
It has been a crazy 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.
Then it all evaporated. The currency’s value plunged sharply in 2018, and by December of that season Bitcoin was really worth less than $US4,000 a coin. Up until this most recent rally which began in October, Bitcoin generally floated between $US5,000 and $US10,000.
While during the last 2 years businesses have embraced the technology which underlies digital currencies like Bitcoin, a concept known as the blockchain, the actual uses for Bitcoin have not truly changed since the rally of its 3 years ago. It is still mostly used by those distrustful of the banking system, criminals seeking to launder money, and for the majority of part, as a store of value.
In fact, other investments usually used as safe havens during uncertain times – notable precious metals – have been trading at near record highs as well.