First 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 merely a few 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’s been no significant change in what it can be used. While many investors are currently making use of the notoriously volatile currency as a “store of value,” that is traditionally a title conserved for safe haven investments like gold and other precious metals.
“Will you be ready to buy a cup of coffee with bitcoin? Probably not with the present model of Bitcoin. It’s largely become 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 that focuses on blockchain technologies as well as companies that deal with cryptocurrencies.
Media attention to its rise has only extra fuel to the rally. But investors in digital currencies and companies that trade or “mine” them are actually warning folks to be sceptical of Bitcoin’s the latest rise and also to be braced for a lot of volatility.
It has been a wild 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 cost for the currency.
In that case all this 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 originated from October, Bitcoin typically floated between $US5,000 and $US10,000.
While during the last 2 years businesses have embraced the technology which underlies digital currencies as Bitcoin, a concept known as the blockchain, the particular uses for Bitcoin haven’t really changed since the rally of its 3 years back. It’s still mostly used by those distrustful of the banking system, criminals seeking to launder cash, and for the vast majority of part, as a department store of value.
In fact, other investments usually used as safe havens throughout uncertain times – notable precious metals – have been trading at near record highs at the same time.