Bitcoin Surges to Another Record High

Bitcoin prices continue to increase.

In a move that only a few optimistic analysts could have predicted, bitcoin has continued its bull run, surpassing all the expectations of sceptics as it reaches one record high after another. The pioneer cryptocurrency known for its volatility started its astronomic rise late last year as it crossed its previous highest value and since then, it has continued to gradually rise, getting closer to $US50,000. For a brief moment on Monday, it rose by over 20 per cent to reach a new all-time high of $US49,226.

This happened soon after Tesla announced that it had invested $US1.5 billion in the virtual currency. It also disclosed plans to start offering bitcoin as a method of payment very soon.  And by its current value, one Tesla is only a little above the price of bitcoin.

Since March 2020. The value of bitcoin has increased by over a thousand per cent. This has led some analysts to say the price could go as high as $US100,000 this year alone.

According to Glassnode, a company that provides insight into blockchain data, the fact that bitcoin has a limited supply means that the price of this virtual asset may increase further as the demand it increases.

We are gradually seeing more investors acquire crypto, not for the purpose of selling but to “hodl” This is a misspelling of the word hold and refers to holding the asset instead of selling it. This has become more commonplace than ever, with about 78% of the bitcoin that has been issued so far being hodled or lost. As the demand increases due to gradual adoption by institutional lenders, more people are choosing to hold their bitcoin instead of selling it with the hopes of a future increase in value.

Holding the asset for the long term appears to be the most profitable than selling as the price continues to increase over time. With 78% being handled, there are less than 4 million bitcoins in the market for future entrants. Some of these entrants are institutional investors like PayPal, Tesla, Square, and several other S&P 500 companies.

While several people seem to hold the belief that bitcoin does not have any intrinsic value, the recent decision of Tesla to invest in the cryptocurrency and its plans to start accepting it for payment has led to analysts predicting a major shift in the common view as it is expected that more institutional investors and major companies will also start accepting it. Already, Apple has also made a significant investment in Bitcoin.

However, Marc Chandler, who works as Chief market strategist at Bannockburn Global Forex, still believes that bitcoin is still a speculative vehicle and nothing else. He claims that even though it is attracting institutional investors, it does not change the fact that it doesn’t have an earnings stream, no replacement or breakup cost, and no intrinsic value, at least in terms of the economist understanding.