After surging past the $30,000 mark last week, crypto currency bitcoin’s value went above the $34,000 mark for the first time on Sunday with greater interest of investors in the digital currency and continued trading of the virtual currency.
With Sunday’s gain, the total gain made by the crypto currency this year at almost $5,000, even though, according to the Coindesk website, the price later drifted lower to about $33,000.
A surge in interest in bitcoin from big investors seeking quick profits was behind the recent rise of the value of the virtual currency.
This growth in bitcoin comes on the back of an almost 300 p per cent growth in its value in 2020 with sharp rise in prices of many other digital currencies too.
In 2020, there was a 465 per cent rise in the price of ethereum, the second biggest crypto currency.
According to some analysts, with the continued drop in the US dollar, the value of bitcoin could rise even further – and as much as $40,000.
In March at the start of the coronavirus pandemic, investors sought to gain safety amid the uncertainty which resulted in the appreciation of the value of the US currency. However its value has since dropped because of major stimulus from the US Federal Reserve. At the end of 2020, the US dollar ended with its biggest annual loss since 2017.
Trading in bitcoin is dome much in the same way as real currencies such as the US dollar and pound sterling. With PayPal being the most recent adopters of digital currencies, there has been growing support of bitcoin as a form of online payment in recent times.
But the crypto currency is also viewed as a volatile investment tool.
With the continued rise in the value of bitcoin, many analysts and experts are of the view that it is just a matter of time that there would be a dramatic correction as had happened three years ago with the collapse of the crypto currency after a bull run.
In 2017, the rally in bitcoin saw its value rising close to the landmark of $20,000 even though it never crossed the value and instead dropped to extreme lows and even below $3,300.
In November last year, bitcoin surpassed $19,000 before dropping sharply again.
A caution of using bitcoin as a payment method was sounded in October by Bank of England Governor Andrew Bailey.
“I have to be honest, it is hard to see that Bitcoin has what we tend to call intrinsic value,” he said. “It may have extrinsic value in the sense that people want it.”
Bailey had also said that he was “very nervous” about people using Bitcoin for payments pointing out that investors should realise its price is extremely volatile.
(Adapted from FinancialTimes.com)