When in July 2010 the valuation of a bitcoin (BTC) went from around $0.0008 to $0.08 for a single coin, it was called the first real price increase for the most popular cryptocurrency.
Many things has changed since that time and during the recent week, bitcoin has hit all-time record as the price exceeded US$24,000. The rising price has boosted appetite of investors, but some uncertainties still remain, as it is well-remembered that the cryptocurrency also got close to the $20,000 mark at the end of 2017 – before collapsing in 2018.
Many things has changed since that time and during the recent week, bitcoin has hit all-time record as the price exceeded US$24,000. The rising price has boosted appetite of investors, but some uncertainties still remain, as it is well-remembered that the cryptocurrency also got close to the $20,000 mark at the end of 2017 – before collapsing in 2018.
Renewed interest towards bitcoin piqued among investors in 2020. In fact, the number of people holding more than 1,000 coins has jumped. Prices rose steadily over the year, starting out at $7,200 on January 1 and closing at $18,353 on November 23. That's an increase of roughly 155%. Bitcoin then took off even further as institutions began to recognize it as a store of value during the rapidly increasing inflation of the dollar from COVID-19 stimulus spending. Bitcoin's price reached a peak of just under $24,000 in Dec. 2020, giving it a year-to-date increase of 224% and an all-time history increase of nearly 500,000% on the Bitstamp exchange, says investopedia.
Billionaires Stanley Druckenmiller and Paul Tudor Jones have both invested in the cryptocurrency and highlighted its potential as a hedge against inflation. Meanwhile, Square, MicroStrategy and Mass Mutual have used their own balance sheets to buy cryptocurrency. PayPal also added the ability for clients to buy bitcoin, which has opened up the market to millions of new buyers.
“We are seeing institutional capital flowing in at the fastest pace in the history of our business, and it is being deployed by some of the world’s largest institutions and some of the most famous investors,” Michael Sonnenshein, managing director at Grayscale Investments, told CNBC.
The most frequently asked question regarding cryptocurrency still remains: how risky is investing in cryptocurrencies? The question is answered metaphorically by Jedidajah Otte from The Times: “if you want to invest in crypto, ponder first whether you would buy a house in Rapid City, South Dakota. This city in the United States has just over 75,000 inhabitants and is reportedly one of the places with the most unpredictable weather on earth, where snow blizzards and summery thunderstorms occur without warning, before everything calms down again and temperatures rise dramatically the very next day. The weather of Rapid City is an apt metaphor to describe the behavior of bitcoin & co: it can be totally bonkers.”
However, institutional fund flows and interest brings more optimism to stakeholders and maybe many of them do not expect the growth trend of December 2020 to continue with the same path, but the overall growth is still imminent.
“Bitcoin will close 2021 above $30,000,” says Sean Stein Smith, Professor, entrepreneur, CPA, and enthusiast for everything blockchain at Forbes, adding that “this might seem like a conservative prediction, especially given the runup that has occurred at the end of 2020, but prices do not go up forever. Given the institutional fund flows and interest, however, it does seem that these recent price trends have support”.
