First it went through $US20,000. Then 10 days later, it broke through $US25,000, and then, with barely taking a breath, it crossed $US30,000. Now merely 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 big change in the way it could be used. Even though some investors now are using the notoriously volatile currency as a “store of value,” which is usually a name kept for safe haven investments as gold as well as other precious metals.
“Will you be ready to purchase a cup of coffee with bitcoin? Most likely not with the current version of Bitcoin. It is basically 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 which focuses on blockchain technologies and businesses that deal with cryptocurrencies.
Media attention to its rise has just extra fuel to the rally. But investors in digital currencies as well as businesses that trade or even “mine” them are warning individuals to be sceptical of Bitcoin’s the latest rise and to be braced for a great deal 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 main 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 really worth lower than $US4,000 a coin. Up until this most recent rally which started in October, Bitcoin typically floated between $US5,000 and $US10,000.
While in the last 2 years companies have embraced the technology which underlies digital currencies as Bitcoin, a principle referred to as the blockchain, the particular uses for Bitcoin have not truly changed after the rally of its three years ago. It’s still mostly used by those distrustful of the banking system, criminals seeking to launder money, and also for the vast majority of part, as a department store of value.
In reality, other investments usually used as safe havens throughout uncertain times – notable precious metals – have been trading at near record highs at the same time.