To start with it went through $US20,000. Then 10 days later, it broke through $US25,000, and then, with hardly taking a breath, it crossed $US30,000. Now just a couple of days into 2021, the cost of bitcoin has crossed $US40,000.
Nothing’s new with the digital currency of the month since it crossed $US20,000 – there is been no big change in how it is often used. While many investors now are using the notoriously volatile currency as a “store of value,” that is usually a name conserved for safe haven investments like gold as well as other precious metals.
“Will you be ready to buy a cup of coffee with bitcoin? Most likely not with the current variant of Bitcoin. It’s mainly turn into a store of value,” said Mike Venuto, a co-portfolio supervisor of the Amplify Transformational Data Sharing ETF, a $US391 million ($503 million) exchanged traded fund which focuses on blockchain technologies as well as businesses that deal with cryptocurrencies.
Media attention to the rise of its has just added fuel to the rally. But investors in digital currencies and companies that trade or even “mine” them are actually warning folks to be sceptical of Bitcoin’s recent rise and also to be braced for a lot 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 price for the currency.
Then it all evaporated. The currency’s value plunged sharply in 2018, and by December of that year Bitcoin was really worth under $US4,000 a coin. Up until this most recent rally which began in October, Bitcoin typically floated between $US5,000 as well as $US10,000.
While within the last two years businesses have embraced the technology that underlies digital currencies as Bitcoin, a concept called the blockchain, the actual uses for Bitcoin have not truly changed after its rally 3 years ago. It’s nonetheless largely used by those distrustful of the banking system, criminals seeking to launder money, and for the vast majority of part, as a store of value.
In fact, other investments typically used as safe havens throughout uncertain times – important precious metals – have been trading at near record highs also.