Bitcoin broke through the $50,000 mark for the first time on Tuesday, doubling its value in less than two months.
The digital currency reached $50,584.85 before closing at $48,642.45, up 0.95 percent for the day and 68 percent for the year, with a total market value in circulation of about $909 billion, according to CoinDesk.
The $50,000 limit is an emotional level for people in this space, said Brian Melville, Chief Strategy Officer for Cumberland Trading Company. But it is also a simple consequence of supply and demand, he added.
It estimates that about 150,000 new bitcoins were minted between August and December. The company estimates that about 359,000 bitcoins were bought in the same period, and the imbalance lasted until 2021. This is a very important measure to monitor, he added.
This purchase demand has led not only to higher prices, but also to growing acceptance of an asset once ridiculed by regulators and lawmakers.
Only in February,
Bank of New York Mellon Corp.
that it will treat Bitcoin like any other financial asset.
stated that it will integrate Bitcoin into its payment network later this year. И
announced that it had purchased $1.5 billion worth of cryptocurrencies for its corporate vaults and planned to accept them as payment.
Besides, billionaire investors like
Paul Tudor Jones
jumped into the room and drew extra attention. Interest from financial professionals – investors and institutions – was one of the main drivers of the rally.
The price of Bitcoin skyrocketed, triggering an impulsive commercial rally that propelled the value higher than ever. WSJ explains how bitcoin trading works and why the volatile digital currency is reaching historic highs. Illustration: Jacob Reynolds/WSJ
A growing number of financial service providers are enabling their customers to trade Bitcoins, including the popular trading app Robinhood Markets Inc. and the Square Inc. platform. Last year, PayPal Holdings Inc. added the crypto business.
But skeptics argue that Bitcoin is mostly a speculative game between investors looking for big profits in an era when money is easy.
Investors looking for momentum have flocked to Bitcoin in recent months as the price rose. And despite recent adoption by companies like Tesla, many financial executives are still hesitant to invest in digital currencies due to their volatility and lack of practical applications.
Bitcoin is created by a process known as mining: People solve complex mathematical puzzles with powerful computers to unlock or mint new coins. The maximum number of Bitcoins that can be created is 21 million, with the original design of the cryptocurrency. The coins themselves can be divided almost infinitely, down to the eighth decimal point or into hundreds of millions.
In its early days, Bitcoin was nothing more than an anarchic project, says Caitlin Long, founder and CEO of Avanti Bank, a crypto-focused charter bank in Wyoming. That’s changed. She said: It’s always on the rise, it’s always technical, but it’s now commonplace, she says.
Rising demand from individual and institutional investors has created an imbalance between supply and demand that has driven up prices, Melville said.
Bitcoin trading machine in a bodega in Manhattan.
Bitcoin was introduced in 2008 and the network was launched in January 2009. Created by
– the pseudonym of the still anonymous founder – was designed as a digital version of physical money. It quickly attracted a diverse group of programmers, anarchists and libertarians.
His early years were full of promise and scandal. Bitcoin was seen as the solution to everything from inflation to poverty to government oppression. But the community that marketed it was full of Ponzi schemes and scams. Most major stock exchanges, including Mount Gox in Tokyo, have collapsed for a variety of reasons.
Around 2013, Silicon Valley and a new generation of entrepreneurs began investing money and real effort into developing financial services that would make coins more stable. Many of the largest companies in the industry have pulled out of these efforts.
Critics say Bitcoin is not so much a currency as a speculative asset, and its price could be determined in part by manipulation. Most commodities, even gold, have a use, said economist and bitcoin critic Nouriel Roubini. However, Bitcoin has very little practical use and does not provide stable income like bonds or stock dividends.
Many people buy at ridiculous prices, he says. They will burn, and once they burn, they will not come back.
President of the European Central Bank
skeptical. In a recent interview, she said that Bitcoin is not a real currency and that the ECB will not buy and hold it. In recent months, she has called for stricter regulation of cryptocurrency, focusing on its use for money laundering.
It’s a perfectly valid concern. By 2020, illegal activities related to cryptocurrences amounted to about $10 billion, according to a report by the analysis company Chainalysis. However, in 2019, it was less than $20 billion.
Yet Bitcoin continues to attract new attention. Mayor of Miami
said Thursday that the city is studying the possibility of using Bitcoin to allow city employees to receive a portion of their salaries in Bitcoin and to allow residents to pay fees and taxes with digital currency.
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frequently asked questions
How much Bitcoin should a beginner invest?
What is the minimum amount to buy Bitcoin? There is no minimum amount to invest in Bitcoin to get started. The minimum amount is the amount set by the platform where you buy your first Bitcoin. For example, Coinbase lets its users buy Bitcoins for $2.
Can a Bitcoin make you a millionaire?
Value of Bitcoin Although it can be difficult, in theory one Bitcoin can eventually make you a millionaire. The value of Bitcoins changes regularly, sometimes rapidly. So if you buy $10 in Bitcoin or my $10 in Bitcoin and then trade it in for $1,000 because it has increased in value, you will earn $990.
How much will Bitcoin be worth in 2030?
In February 2020, Edstrom predicted that Bitcoin would reach a market capitalization of $8 trillion by 2030. Although he did not mention it, this is considered the approximate size of the gold market. Either way, this would bring the price per unit to about $400,000.
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