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. At this point only a couple of days into 2021, the price 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 big change in how it could be used. Although some investors are now using the notoriously volatile currency as a “store of value,” which is usually a title saved for safe haven investments like gold as well as other precious metals.
“Will you be ready to purchase a cup of coffee with bitcoin? Probably not with the present variant of Bitcoin. It is largely 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 additional fuel to the rally. But investors in digital currencies as well as firms that trade or perhaps “mine” them are warning men and women to be sceptical of Bitcoin’s the latest rise and to be braced for a lot of volatility.
It has been a wild ride for bitcoin the last 3 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 cost 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 under $US4,000 a coin. Up until this most recent rally which originated from October, Bitcoin typically floated between $US5,000 and $US10,000.
While during the last 2 years companies have embraced the technology which underlies digital currencies as Bitcoin, a concept referred to as the blockchain, the particular uses for Bitcoin haven’t really changed after its rally 3 years back. It’s still mostly used by those distrustful of the banking system, criminals seeking to launder money, and also for the most part, as a department store of value.
The truth is, other investments typically used as safe havens throughout uncertain times – notable precious metals – have been trading at near record highs as well.