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Bitcoin surge continues full-steam into 2021
Bitcoin began the new year with a surge over $30,000 for the first time, just weeks after taking another major milestone. The price of the cryptocurrency traded as high as $33,099 on Saturday (Jan. 2). For comparison, the controversial digital asset started 2020 at $7,200 and ended the year at nearly $30,000, up 296% despite a severe crash in March 2020 when it had dipped more than 25%. So, what accounts for the massive uptick in value?
Since March 2020, bitcoin has staged a marvelous recovery. Investors expect to make quick gains amid some positive developments around the first decentralized cryptocurrency, including speculations that it could become a mainstream payment method. A major jump in Bitcoin price - from $5,000 to $25,000 - was seen after online payments giant PayPal announced in October 2020 that it will enable its account holders to use the cryptocurrency.
After PayPal's announcement, analysts at JPMorgan Chase compared bitcoin to gold. And supporters of cryptocurrencies say it is only a matter of time before other large companies follow in the footsteps of PayPal.
Proponents have also seized on the narrative that the coin could act as a store of wealth amid supposed rampant central-bank money printing. Big US investors including some Wall Street firms have taken a greater interest, with many seeking to capitalize on bitcoin’s gains in a world of rock-bottom interest rates.
At the end of December, SkyBridge Capital, the company owned by the former White House Communication Director Anthony Scaramucci had invested $ 182 million in bitcoin. In October, NYSE-listed payment company Square Inc. bought 4,709 bitcoins, worth approximately $50 million. “The investment underscores Square’s purpose of economic empowerment” the company said.
Another reason behind the rise of Bitcoin may be central banks’ announcements of plans for bank-backed digital units. The US Federal Reserve and several other banks - including those in China and Sweden – are testing digital applications as a reaction to social media giant Facebook's recent move to start producing its own digital unit called Libra.
Unregulated by any central bank, bitcoin accounts for more than 70 percent of the global cryptocurrency market and continues to be an attractive option for investors. The consensus now appears to be: Bitcoin isn’t going away. It has existed since 2009 and will continue to exist. But bitcoin’s ability to rise from the ashes so quickly and hit all-time highs might serve as a demonstration of how quickly things can change for better and for worse in the crypto world.