Ali Hasan
Just a few days ago we talked about what is a bubble and the possibility of bitcoin being in a bubble and look what happened. Bitcoin which is the hottest trending investment as of now saw a significant rise in its price when it crossed $42,000 threshold just a month ago.
But looks like its losing momentum as its value fell to $28,944.80 per bitcoin. All of this happened in a span of just 1 month. It gained from there and is currently trading at $31,630 per bitcoin at the time of writing this blog. But one thing is sure that bitcoin is highly volatile and its value can shoot up or dive down anytime without any warnings or signals.
Bitcoin might fall even more
The drop in prices against the US dollar comes amid growing fears that bitcoin is one of a number of financial market price bubbles. According to traders, concerns over the fact that U.S. President Joe Biden’s administration could attempt to regulate cryptocurrencies have also weighed on the sentiment.
During a Senate hearing on Tuesday, January 19, Janet Yellen, Biden’s pick to head the US Treasury, expressed concerns that cryptocurrencies could be used to finance illegal activities. “I think many are used, at least in a transactions sense, mainly for illicit financing, and I think we really need to examine ways in which we can curtail their use and make sure that money laundering does not occur through these channels” said the former chair of the U.S. Federal Reserve.
Meanwhile, the virtual currency has had a broader bull run since October 2020, ever since US-based online payments firm PayPal allowed its customers to use bitcoin on its network. The cryptocurrency crossed the $30,000 mark for the first time on January 2, 2021, after breaching the $20,000 on December 16, 2020. The bull-run was witnessed amid growing investor sentiment due to bitcoin’s inflation-hedging qualities and the tendency for quick gains.
On January 7, the total market value of all cryptocurrencies surged above $1 trillion for the first time ever, as prices of bitcoin surged to a record high. Bitcoin climbed more than 900% to $38,655, from $3,850 in March 2020, further rising to the $42,000 mark on January 8. The market cap of all cryptocurrencies had increased 10% to $1.042 trillion, out of which bitcoin accounted for around 69% of the total market capitalization. Bitcoin had almost quadrupled in value surging exponentially in the past year, after entering the four-digit value for the first time in 2013.
In comparison, Ether, which has a market cap of $154 billion, has surged around 86% this year. Other prominent cryptocurrencies such as stellar, ripple, and tether traded 6%, 7% and 0.18% lower, respectively, on Wednesday. The stellar rally in cryptocurrencies over the past few months has attracted interest from large global institutions. Coindesk recently reported that US banker Goldman Sachs has issued a request for information (RFI) to explore digital asset custody.
Ever since its launch, bitcoin’s journey has been filled with ups and downs as it is still not recognized as legal by many central banks. However, many banks are exploring the possibility to allow the issuance of digital currencies. Unlike a physical currency, bitcoins are created, traded, as well as distributed through a decentralized ledger system known as a blockchain.
- So what do you think?
- Is bitcoin in a bubble?
- Did you buy bitcoin?
- Will you buy it now?
- Or have you sold them?
Do tell us in the comments as they’re valuable to us and we will be replying to the comments that we find interesting.
