With the announcement by Square of it purchasing $170 million worth of the crypto currency bitcoin, the price of the largest crypto currency of the world in terms of market capitalization surged again, after a few days of dropping, and climbed to more than $50,000 again.
According to data from Coin Metrics there was a 7.5 per cent surge in the price of the most valuable digital coin of the world and touched a price of $50,683 on Wednesday. During its highest point in the day, the value of the crypto currency climbed as high as $51,369.
The rise in bitcoin also rubbed off on other crypto currencies with a 11.3 per cent and a 7.4 per cent rise in the values of ether and XRP respectively. It is common to see the value of the so-called altcoins, or alternative crypto currencies, to rise with a rise in the value of bitcoin.
A day earlier on Tuesday, an announcement of it purchasing 3,318 bitcoins at an average price of around $51,235 was made by the fintech company Square. About 5 per cent of its total assets is currently accounted for by bitcoin, said the fintech company, which is run by Twitter CEO Jack Dorsey.
Square had also invested in the crypto currency previously when last year the company had made a purchase of bitcoins for an investment of $50 million. One of the most vociferous proponents of bitcoin, Dorsey had once said that he believes that the crypto currency will eventually become the “single currency” of the internet.
The beginning of this current week however was rough for bitcoin as it dropped from a record high of $58,356 Sunday and reached as low as $45,501 on Tuesday. Bitcoin is known to be a very volatile asset with its price wild fluctuations in its prices. In 2017, this crypto currency had risen to almost touch $20,000 and then crashed dramatically to historic lows the year after.
So far this year, the value of the crypto currency has grown by more than 70 per cent and has grown by more than 400 per cent over the last one year. This astronomical rise in the value of bitcoin has drawn the attention of a wide range of people from Tesla CEO Elon Musk to US Treasury Secretary Janet Yellen.
Bitcoin was called an “extremely inefficient” means of payment and warned about its use in illicit activity by Yellen earlier this week.
“It is a highly speculative asset and … I think people should be aware it can be extremely volatile,” the former Federal Reserve chair said at a New York Times DealBook conference. “I do worry about potential losses that investors can suffer.”
On the other hand, Musk reaffirmed his belief in the crypto currency. An investment of 41.5 billion was recently made in purchasing bitcoins by his electric car company Tesla. In a recent tweet, the billionaire tech entrepreneur said that he believes that bitcoin could be “on the verge of getting broad acceptance” among conventional financial services firms.
(Adapted from CNBC.com)