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. 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 major change in the way it can be used. Although some investors now are making use of the notoriously volatile currency as a “store of value,” which is traditionally a name conserved for safe haven investments as gold and other precious metals.
“Will you be ready to buy a cup of coffee with bitcoin? Probably not with the present variant of Bitcoin. It is mainly turn into a store of value,” said Mike Venuto, a co-portfolio director of the Amplify Transformational Data Sharing ETF, a $US391 million ($503 million) exchanged traded fund which focuses on blockchain technologies and firms that deal with cryptocurrencies.
Media attention to the rise of its has merely extra fuel to the rally. But investors in digital currencies and firms that trade or “mine” them are warning people to be sceptical of Bitcoin’s recent rise and to be braced for a great deal of volatility.
It’s been a wild ride for bitcoin the previous 3 years. The digital currency made its big Wall Street debut in December 2017, when the main futures exchanges rolled out bitcoin futures. The focus drove Bitcoin to roughly $US19,300, a then-unheard of price for the currency.
In that case all this evaporated. The currency’s value plunged sharply in 2018, and by December of that year Bitcoin was really worth lower than $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 within the last 2 years companies have embraced the technology that underlies digital currencies like Bitcoin, a principle referred to as the blockchain, the actual uses for Bitcoin have not really changed since its rally three years back. It is 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 during uncertain times – notable valuable metals – have been trading at near record highs also.