The world’s largest and most famous cryptocurrency, Bitcoin, has vaulted past a valuation of $20,000 dollars per coin for the first time in its eleven-year history.
To the delight of Bitcoin Bros and HODLers everywhere, the digital currency - renowned for its extreme volatility - has even surged beyond the $23,000 mark, with markets buoyed by the breaking of the psychologically significant milestone.
The arrival at the current valuation is the product of a bull run (or period of growth) that began in late November, at which point the cryptocurrency was valued at roughly $16,500. In the last 24 hours alone, the Bitcoin price has risen by more than 20%.
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Bitcoin price
Ever since Bitcoin entered the public consciousness, a debate has raged on about whether its meteoric rise in value constitutes a market bubble (when the value of an asset becomes wildly over-inflated) or is simply representative of the role cryptocurrency could play in the financial ecosystem of the future.
Long-time holders of the cryptocurrency (also known as HODLers) have had to weather a series of rises and falls in value. Most famously, after reaching highs of $19,783.21 in December 2017, Bitcoin plummeted to below $8,000 within just two months.
Investors that came in at the peak saw 60% of the value of their investment wiped out, which some saw as the popping of the Bitcoin bubble.
The most ardent Bitcoin supporters, however, maintained that the currency would reach new heights well beyond the $20,000 mark. This week, for example, the CIO of asset management firm Guggenheim Investments told Bloomberg he believes Bitcoin “should be worth about $400,000”.
Rising confidence in the cryptocurrency is also echoed in interest shown by institutional investors. In recent months, insurance giant MassMutual purchased $100 million-worth, while tech firm MicroStrategy converted most of its balance sheet (circa $500 million at the time of initial purchase) to Bitcoin - and has even raised additional capital to finance further purchases.
However, while Bitcoin may yet reach far loftier valuations, investors looking to catch this latest wave should exercise a measure of caution. As in 2017, a significant market correction may soon take place, shaving billions off the cryptocurrency’s market capitalization.
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