To start with it went through $US20,000. Then ten days later, it broke through $US25,000, and then, with hardly taking a breath, it crossed $US30,000. Now just a few days into 2021, the cost 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 the way it is often used. Although some investors now are making use of the notoriously volatile currency as a “store of value,” which is usually a title conserved for safe haven investments as gold and other precious metals.
“Will you be able to purchase a cup of coffee with bitcoin? Most likely not with the present variant of Bitcoin. It is basically turn into a store of value,” said Mike Venuto, a co-portfolio supervisor of the Amplify Transformational Data Sharing ETF, a $US391 million ($503 million) exchanged-traded fund that focuses on blockchain technologies as well as companies that deal with cryptocurrencies.
Media attention to its rise has only added fuel to the rally. But investors in digital currencies and companies that trade or perhaps “mine” them are actually warning folks to be sceptical of Bitcoin’s the latest rise and also to be braced for a lot of volatility.
It’s been a wild ride for bitcoin the previous three years. The digital currency made its big Wall Street debut in December 2017, when the main futures exchanges rolled out bitcoin futures. The notice drove Bitcoin to about $US19,300, a then unheard of cost for the currency.
Well then all this evaporated. The currency’s value plunged sharply in 2018, and by December of that year Bitcoin was really worth under $US4,000 a coin. Up until this most recent rally which started in October, Bitcoin generally floated between $US5,000 as well as $US10,000.
While during the last two years businesses have embraced the technology that underlies digital currencies like Bitcoin, a concept called the blockchain, the particular uses for Bitcoin have not truly changed after 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 vast majority of part, as a store of value.
In reality, other investments usually used as safe havens during uncertain times – important precious metals – have been trading at near record highs as well.