To start with it went through $US20,000. Then ten days later, it broke through $US25,000, and then, with seldom taking a breath, it crossed $US30,000. Now merely a couple of days into 2021, the price 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 how it tends to be used. While many investors now are making use of 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 able to buy a cup of coffee with bitcoin? Most likely not with the current model of Bitcoin. It is 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 which focuses on blockchain technologies and businesses that deal with cryptocurrencies.
Media attention to its rise has merely added fuel to the rally. But investors in digital currencies as well as businesses that trade or even “mine” them are warning folks to be sceptical of Bitcoin’s the latest rise and to be braced for a great deal of volatility.
It’s been a wild ride for bitcoin the last 3 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.
In that case all this evaporated. The currency’s value plunged sharply in 2018, and by December of that year Bitcoin was worth lower 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 as Bitcoin, a concept known as the blockchain, the particular uses for Bitcoin have not really changed since its rally 3 years back. It’s still largely used by those distrustful of the banking system, criminals seeking to launder cash, and also for the vast majority of part, as a department store of value.
The truth is, other investments typically used as safe havens throughout uncertain times – important valuable metals – have been trading at near record highs as well.