Just weeks after it shattered its yearslong aspiration of reaching $20,000 in value, Bitcoin is at it again. On Saturday, the cryptocurrency passed $33,000 in value, according to CoinDesk, before dipping slightly throughout the day.
Bitcoin’s new gains represent an all-time high for the currency, a stunning turnaround considering where it was almost a year ago. In March, Bitcoin lost 50% of its value in two days, dropping to below $4,000, mirroring the volatility on Wall Street during the early days of the pandemic. Nonetheless, the world’s leading cryptocurrency closed out the year with an increase of more than 300%, per CoinDesk. At the time of publication of this blog, it had increased 10.62% in the past 24 hours and had a $605 billion market cap.
Nonetheless, as we’ve said before, this isn’t meant to be encouragement to go out and buy Bitcoin. (Considering that we are currently in a global health crisis, please do not use your hard-earned savings to buy Bitcoin). The cryptocurrency is famously moody, and in recent years has delivered as much excitement as it has despair.
Case in point: In 2017, the last time Bitcoin got close to $20,000 in value, it lost more than 80% of its value the following year.
Bitcoin has undoubtedly benefitted from increased oversight, such as the creation of the FICO cryptocurrency risk assessment solution for banks, as well as more institutional investment and support. In November, the Guggenheim Macro Opportunities Fund announced that it may seek to invest up to 10% of its net asset value in Bitcoin. PayPal also gave Bitcoin and other currencies a thumbs up last year when it announced that it would accept cryptocurrency for online payments and also allow its users to buy, sell, and hold cryptocurrencies.
Other investing power players, such as Rick Rieder, chief investment officer of global fixed income at BlackRock, the world’s largest asset manager, said that Bitcoin was “here to stay” and that it had potential to replace gold. That said, as of November Rieder had not added Bitcoin to any of his investment portfolios.
Bitcoin’s new record has caused a stir, with some financial experts saying that it’s on the road to increase even more. Others disagree and say it’s way overpriced, possibly by more than 50%, and that its real fair value is about $12,000.