Bitcoin Crosses $40.000 As the Record-breaking Streak Continues
The winning streak for the number one digital currency continues as Bitcoin hits a brand-new record.
The leading cryptocurrency has hit a new record mark of $40.000 as the further success with the coronavirus vaccine hints at a global economic recovery much sooner than we all expected. Bitcoin was able to raise over 300% just last year, which lead to an abrupt rise in other cryptocurrencies as well such as Ethereum with a 450% jump. Analysts are even claiming that if Bitcoin keeps up its winning streak, it could easily top the value of the US dollar. Though this seems like a stretch, the latest achievements of digital currency beg to differ. Though the US currency rose back in March at the beginning of the pandemic, it has since significantly dropped despite several attempts made by the Federal Reserve to revive it. It last ended at its lowest level since 2017.
The Pattern of Demand
Some investors are fearing an impending bubble that Bitcoin might have found itself in as the current level of $40.000 does not seem like it would last. However, the demand for digital currency has never been greater, and its overall performance since the beginning of the year has been astonishing to even the harshest of critics. The cryptocurrency seems to be continuously booming since past March, but the turbulent slide of 12% back on January 8 has some analysts worried. Namely, they are claiming that we shouldn’t be so quick to jump on the Bitcoin bandwagon until its value settles for at least longer than a couple of hours.
Though Bitcoin is extremely volatile, its last big peak came back in June of 2019 with a jump to nearly $14.000. Back then, Bitcoin experienced hard resistance and soon started to decline again. The analysts are fearing that this could easily happen again, which is why they are warning the investors against putting all their resources into this digital currency.
The Infamous Bitcoin Bubble
The Bank of America’s Chief of Investment Strategies Michael Hartnett has been particularly vocal about Bitcoin being in a bubble we should all steer clear of. Based on the strength and the speed of the digital currency, Hartnett is warning about this bubble bursting and then soon being replaced with a new one, and the cycle continuing in the future, as well. However, the analysts are again pointing out that when an asset is found in a bubble on the market, its price will greatly exceed its intrinsic value, which is not something to be afraid of – quite the opposite! The bubble which was supposedly created around the digital currency is not an indicator of an impending burst. This all depends on the future demand for it, as well as many other factors that contribute to its value.
However, Bitcoin’s intrinsic value is the main question here, since it is quite hard to determine it due to the volatility. The technology surrounding this entire world of digital currencies is still fast-paced and thus difficult to tame and detect some sort of a trend or have certainty in its future behavior on the market. As of right now, Bitcoin is sending signals that it can soon become stronger than even some country’s currencies, which is quite concerning news for the central banks across the globe.
Additionally, Bitcoin has been starting to grow its name as a safe-haven asset, considering its immense ability to withstand challenges on the market, especially in comparison to other assets. The tech giants from all around the globe are starting to turn to Bitcoin as their additional means of payment, purchasing as close to half a billion dollars-worth of the digital currency for their future transactions. However, the question of when Bitcoin will run out – literally, is something that is weighing over all our heads. After all, when Bitcoin hits that 21 million mark, the entire environment in which it previously performed will change drastically. This, again, opens the question of volatility and the importance of the demand for the number one digital currency in the world in the aftermath of those events.