To start with it went through $US20,000. Then ten days later, it broke through $US25,000, and then, with barely 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 brand new with the digital currency in the month since it crossed $US20,000 – there is been no big change in the way it could be used. Although some investors now are using the notoriously volatile currency as a “store of value,” which is traditionally a title kept for safe haven investments as gold along with other precious metals.
“Will you be in a position to buy a cup of coffee with bitcoin? Probably not with the current model of Bitcoin. It is largely become a store 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 as well as businesses that deal with cryptocurrencies.
Media attention to the rise of its has just extra fuel to the rally. But investors in digital currencies as well as businesses that trade or even “mine” them are actually warning men and women to be sceptical of Bitcoin’s the latest rise and to be braced for a lot of volatility.
It’s been a crazy ride for bitcoin the last three 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 roughly $US19,300, a then-unheard of selling price for the currency.
Then it all 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 began in October, Bitcoin typically floated between $US5,000 and $US10,000.
While within the last two years businesses have embraced the technology that underlies digital currencies like Bitcoin, a principle called the blockchain, the actual uses for Bitcoin haven’t truly changed after the rally of its 3 years ago. It’s nonetheless mostly used by those distrustful of the banking system, criminals seeking to launder cash, and for the most part, as a store of value.
The truth is, other investments usually used as safe havens throughout uncertain times – important valuable metals – have been trading at near record highs as well.