Bitcoin has rocketed to a record high amid rising interest from investors and claims that the volatile cryptocurrency is on the way to becoming a mainstream payment method.
Having quadrupled in value during 2020, bitcoin began 2021 strongly by breaking through the $30,000 (£22,000) mark for the first time, less than three weeks after first trading above $20,000. On Sunday, it hit a new high of more than $34,800, on its 12th birthday.
Bitcoin’s rapid climb has rekindled memories of previous crazy rallies and crashes. During 2017, it leapt from about $1,000 to peak over $19,000, before tumbling to below $4,000 by the end of 2018.
But this latest rally comes as some financial institutions show growing interest in bitcoin as an asset class, and as its supporters argue that it is supplanting gold as a store of value.
“The number keeps going up as the market has seemingly never been more bullish,” said Paolo Ardoino, the CTO of cryptocurrency exchange Bitfinex. “We see a very bright future ahead for all bitcoin holders.”
With the US dollar at its lowest level since spring 2018, advocates of cryptocurrencies claim they protect against inflationary money-printing by central banks, which launched unprecedented stimulus programmes last year amid the Covid-19 pandemic. “Some will argue that there is more to come from both gold and bitcoin, especially if governments keep piling up debts and central banks do their best to fund that borrowing through the backdoor with quantitative easing, zero interest rates and bond yield manipulation, thanks to the scarcity value relative to cash,” said Russ Mould, the investment director of UK investment platform AJ Bell. “Others will argue neither gold nor bitcoin have intrinsic value, as they do not generate cash,” he added. Bitcoin received a boost from PayPal last autumn, when the bank announced it would allow customers to buy, sell and use the cryptocurrency. Analysts said this could be driving the price surge, by creating a shortage as PayPal buys up newly created bitcoins. There are more than 18m bitcoins in existence, created by the miners who provide the computational power underpinning the blockchain, which records transactions made using bitcoin. The system has a hardwired maximum of 21m coins.
Just a thought for you.... with 50 million millionaires currently on the planet, what happens if they all want one each?
What do you think the future holds for Bitcoin?