First it went through $US20,000. Then ten days later, it broke through $US25,000, and then, with hardly taking a breath, it crossed $US30,000. At this point merely a few days into 2021, the price of bitcoin has crossed $US40,000.
Nothing’s new with the digital currency of the month since it crossed $US20,000 – there’s been no major change in what it may be used. While many investors are currently using the notoriously volatile currency as a “store of value,” which is usually a title kept for safe haven investments like gold and other precious metals.
“Will you be able to purchase a cup of coffee with bitcoin? Probably not with the current version of Bitcoin. It’s largely 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 that focuses on blockchain technologies as well as firms that deal with cryptocurrencies.
Media attention to its rise has only added fuel to the rally. But investors in digital currencies as well as companies that trade or “mine” them are actually warning people to be sceptical of Bitcoin’s the latest rise and also to be braced for a great deal of volatility.
It has been a wild ride for bitcoin the previous 3 years. The digital currency made its big Wall Street debut in December 2017, when the major futures exchanges rolled out bitcoin futures. The focus drove Bitcoin to roughly $US19,300, a then unheard of selling 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 less than $US4,000 a coin. Up until this most recent rally which began in October, Bitcoin generally floated between $US5,000 and $US10,000.
While in the last two years companies have embraced the technology that underlies digital currencies like Bitcoin, a principle called the blockchain, the actual uses for Bitcoin haven’t really changed after its rally three years ago. It is still mostly used by those distrustful of the banking system, criminals seeking to launder money, and for the majority of 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.