To start 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 few days into 2021, the price 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 major change in what it is often used. Although some investors now are using the notoriously volatile currency as a “store of value,” that is traditionally a name conserved for safe haven investments as gold along with other precious metals.
“Will you be in a position to buy a cup of coffee with bitcoin? Most likely not with the current model of Bitcoin. It is mainly turn into 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 companies that deal with cryptocurrencies.
Media attention to the rise of its has merely additional fuel to the rally. But investors in digital currencies and businesses that trade or “mine” them are actually warning people to be sceptical of Bitcoin’s recent rise and also to be braced for a lot of volatility.
It’s been an untamed ride for bitcoin the last three 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 about $US19,300, a then unheard of selling price for the currency.
In that case all of it evaporated. The currency’s value plunged sharply in 2018, and by December of that season Bitcoin was worth under $US4,000 a coin. Up until this most recent rally which started in October, Bitcoin generally floated between $US5,000 and $US10,000.
While within the last two years companies have embraced the technology that underlies digital currencies like Bitcoin, a concept known as the blockchain, the particular uses for Bitcoin have not truly changed after the rally of its 3 years back. It’s still largely used by those distrustful of the banking system, criminals seeking to launder money, and for the most part, as a store of value.
In reality, other investments typically used as safe havens during uncertain times – notable valuable metals – have been trading at near record highs as well.