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 just a few days into 2021, the selling price 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 what it might end up being used. Although some investors now are using the notoriously volatile currency as a “store of value,” which is usually a name kept for safe haven investments like gold as well as other precious metals.
“Will you be in a position to buy a cup of coffee with bitcoin? Most likely not with the current version of Bitcoin. It’s basically 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 that focuses on blockchain technologies and businesses that deal with cryptocurrencies.
Media attention to its rise has just extra fuel to the rally. But investors in digital currencies and businesses that trade or perhaps “mine” them are actually warning individuals to be sceptical of Bitcoin’s recent rise and to be braced for a lot of volatility.
It’s been a wild ride for bitcoin the previous three years. The digital currency made its big Wall Street debut in December 2017, when the key futures exchanges rolled out bitcoin futures. The focus drove Bitcoin to about $US19,300, a then unheard of selling price for the currency.
In that case it all 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 and $US10,000.
While in the last two years companies have embraced the technology which underlies digital currencies like Bitcoin, a principle called the blockchain, the particular uses for Bitcoin have not really changed after its rally three years ago. It’s still largely used by those distrustful of the banking system, criminals seeking to launder money, and also for the vast majority of part, as a store of value.
In reality, other investments usually used as safe havens during uncertain times – important valuable metals – have been trading at near record highs also.