Bitcoin breaks all the records during the coronavirus pandemic. Where does it leave us, the investors?
For the first time in history, the cost of bitcoin exceeded the $ 33 000 mark. Why are fans of this cryptocurrency predicting stunning growth for it, and how is this related to the Covid-19 pandemic?
Investors around the world are betting on this cryptocurrency to hedge against inflation, as central banks continue to issue money to help the economy emerge from its deepest recession since World War II. On Saturday, January 2, the most famous cryptocurrency surpassed the $ 33 000 mark. 12 years after its inception, bitcoin is more popular than ever. However, it is currently still not a generally accepted means of payment. It is in the process of trying to establish itself as a reliable and stable currency.
The Ups and Downs of Bitcoin
The bitcoin price has updated the historical maximum several times at the end of 2020 – the beginning of 2021. The growth of the first cryptocurrency exceeded the 300% figure, eclipsing the performance of traditional assets.
Bitcoin hash rate and miners’ revenues have grown significantly even despite halving.
Institutional investors purchased over 1 000 000 BTC with a current value of over $ 35 000 000 000.
Bitcoin’s current meteoric rise is a little bit reminiscent of its growth of 2017, when the value of a digital coin doubled to $ 19 340 in less than a year. This made all the biggest investors turn their attention to cryptocurrency. But their euphoria quickly passed: the next year, the value of bitcoin fell by 70%, which ruined many small investors.
Bitcoin’s brief history is full of such ups and downs. In 2011, the exchange rate of this digital currency for several months rose by 11 000%, and in the following months collapsed by 90%. Two years later, in 2013, the value of bitcoin surged to $ 220 and then fell more than 80%. Later that year, it crossed the $ 1 000 mark, and a year later, in 2015, it again traded around $ 150.
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Why can Bitcoin continue to grow?
Well, some cryptocurrency fans say things might be different this time around. Earlier, speculative small investors were behind the sharp change in the Bitcoin exchange rate. Now, digital coins are on the rise and are attracting more and more attention from the world’s largest financial institutions, such as Fidelity Investments and JPMorgan. Fidelity’s survey of 800 large institutional investors in the US and Europe found that more than a quarter of them own bitcoins.
Fidelity itself, which manages $ 3.3 trillion in assets, announced in August that it was launching its own bitcoin fund. Another sign of acceptance of the digital currency is the innovations of the PayPal payment company. In October, it allowed customers to buy and sell bitcoins and other cryptocurrencies using their accounts. Since then, the price of bitcoin has risen by almost 70%.