Bitcoin has broken through the 20,000-dollar ceiling for the first time. The world’s largest cryptocurrency is enjoying a steep rally with the big shot institutional investors jumping back on the virtual wagon.
According to CoinDesk on Thursday afternoon, Bitcoin was traded at 21,880 dollars. The price almost trebled from 7,251 dollars from late last year. Bithumb, a South Korean cryptocurrency exchange, saw the prices of Bitcoin soaring up to 23.88 million Korean won at 3:33 p.m. Thursday. Unlike stock market, the exchange for Bitcoin runs 24 hours a day.
Experts say Bitcoin’s recent surge is attributable to the “money pumping” by governments and central banks. They say Bitcoin is emerging as new alternative investment in the ranks of gold and national bonds as a massive influx of liquidities is dragging down the value of physical currencies.
Investors are closely monitoring the trajectory of Bitcoin prices in comparison with the 2017 scenario. Back then, the price of Bitcoin hovered around 20,000 dollars with no clear reason but plummeted to 3,000 dollars the following year.
Many argue that the recent trending of Bitcoin is different from three years ago. In October 2019, PayPal, the world’s biggest online payment system, announced that it will accept payment by Bitcoin, and the major players in investment market are scrambling to grab the cryptocurrency with Fidelity Investment launching a Bitcoin fund. S&P Dow Jones Indices, the service provider of financial information, is planning to provide virtual currencies index next year. Overall, the market for cryptocurrency is expanding with major economies including China while considering introducing central back digital currency (CBDC).
Bolstering the momentum of virtual currencies is the expectation on the continued low-rate trend. On Wednesday, the Fed expressed its plan to stick to its alleviative monetary policy in the mid-and long-term. “If the “zero rate” trend goes on, the value of existing currencies will fall inevitably,” said Han Dae-hoon, a researcher at SK Securities. “This makes Bitcoin an even more attractive alternative.”
Concerns remain, however, about Bitcoin’s extremely high volatility and uncertainties. Comparing it with gold is tricky as Bitcoin doesn’t exist in a physical form. Lack of security is another source of concern with the possibility of Bitcoin being abused for money-laundering or illegal transfer of funds.