Bitcoin hits its new highest as it almost reaches the value of $20,000. On Monday, Coindesk reported that Bitcoin has broken its previous record set three years ago and reached a new peak of $19,850. However, later on, the same day price came down a little to $19,223.
Earlier this year, the cryptocurrency was at its lowest point in three years, and many had given up on their investments. Bitcoin value dropped as low as $4,000 when the pandemic was on the rise.
Analysts have explained multiple reasons behind this surge in price. Analysts on Wall Street have been sharing positive comments lately about the virtual currency. Another reason is sudden interest from institutional investors. Chicago Mercantile Exchange has seen an increase in Bitcoin futures contracts. Paypal also plays its role in the Bitcoin price surge. Paypal has introduced 346 million users to buy Bitcoin since they announced this option on October 21.
Comparing the two Price Surges
Back in 2017, when Bitcoin’s value spiked, it was followed by a massive drop bringing Bitcoin’s worth as low as $3500. Because of that poor experience, many think this could also be a temporary surge, and Bitcoin is about to go down again. However, that is not the case this time, according to many analysts.
In 2017, the price hike was primarily due to sudden interests from Asian investors who had just learned about cryptocurrency. Soon after that, the virtual currency lost its momentum as people started questioning its potential and what it could do.
However, this time, the surge’s reasons are different and could cause this increased value to remain. American investors are treating the currency as a significant source of investment. Cryptocurrencies are now being treated as an asset, just like gold. This change of mentality would convince more investors and companies to invest in the currency for the long term.
Tyler Winklevoss is a venture capitalist who was the first publicly identified Bitcoin billionaire. According to him, a single Bitcoin could eventually be worth $500,000 as it takes an increasing role in the global financial system.
Although the volatility of the Bitcoin price will remain the same, we might not see a drastic fall in its price as we saw in 2017.
Why the Sudden Interest in Bitcoin?
Bitcoin is an asset that can be bought, stored, and sold without any government or financial institutions’ involvement. Moreover, the pandemic has seen the need for digital currency. The moment Bitcoin showed a little promise; it was considered the right place to invest in by many.
The transparent process of getting a wallet and investing without providing many details has convinced many individuals. Countries that want a way out of American financial sanctions and shift towards a decentralized payment system are pushing for this switch.
Bitcoin lies on a public ledger called blockchain, and it is available for anyone to purchase at any given time. It is maintained by users voluntarily around the world, forming a vast network. The processes performed on the ledger are visible to every user making the entire thing transparent. The openness of the process attracts investors, and people hope for it to be their solution to problems fiat money can’t solve.