Given Ruvic / Reuters
- Bitcoin has reached a new historical record of more than $ 41,000, as the rise in cryptocurrencies has shown little sign of slowing, despite recent volatility.
- Bitcoin and cryptography have been driven by record amounts of fiscal and monetary stimuli that drown markets in cash, as well as fears about currencies and inflation.
- Critics question whether the rally is sustainable and point to earlier flaws in Bitcoin, such as when it fell from $ 19,000 to $ 4,000 between 2017 and 2019.
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Bitcoin reached a new historical record of more than $ 41,000 on Friday morning, staging a rapid recovery despite dropping to less than $ 37,000 overnight.
The cryptocurrency has risen 10.75% in the past 24 hours to $ 41,361 in Bitstamp exchange at 06.15 ET, having first touched $ 40,000 on Thursday.
Bitcoin’s value has more than doubled in the last month, and has increased by more than 30% in 2021 so far. It is now more than 400% higher than a year ago, according to Bitstamp, causing critics to question the rally’s sustainability.
The recovery was driven by the huge amounts of money injected into economies by governments and central banks amid the coronavirus crisis.
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Bitcoin has soared and fallen before, dropping from more than $ 19,000 in December 2017 to less than $ 4,000 just over a year later.
But its proponents argue that this time is different, pointing to institutional investors and the super-rich buying the currency. For them, the question is how far the currency can rise.
“Investors continue to embark on the cryptocurrency train, which appears to be gaining more interest now that the US economy is poised to offer more stimulus in [Joe] The first 100 days of Biden, “said Edward Moya, senior market analyst at foreign exchange firm Oanda.
“The stimulus for Bitcoin is not going to disappear anytime soon,” said Moya. “The rise in COVID infections only means that governments and central banks will continue to be aggressive with fiscal and monetary stimulus efforts.”
Naeem Aslam, chief market analyst for the Avatrade trading platform, said: “The cryptocurrency has reached an important milestone and has exceeded the $ 40,000 level, which made the $ 50,000 price as real as possible.”
Rival cryptocurrency Ethereum has risen 6.26% in the past 24 hours, to $ 1,269.47 on Friday morning, according to data from Coinbase. It was a little out of an all-time record set yesterday.
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The sharp rise and sharp drop in bitcoin from more than 5% to less than $ 37,000 overnight scared some commentators, with the cryptocurrency continuing to drastically split opinions.
“This could be a big bomb before a big sale in the next few days. The increase we saw is just astonishing,” said Neil Wilson, chief market analyst at the trading platform Markets.com.
“I would be on the lookout for a major accident, but short selling Bitcoin has been a painful business, like short selling to Tesla.”
Bitcoin bears argue that the big rise in an asset without any fundamental economic factors that sustain it is doomed to break, as it has in the past. They also cite government regulations as a danger.
However, Wall Street giant JPMorgan said earlier this week that the digital currency could reach $ 146,000 if investors start taking it seriously as a safe-haven, as gold does.