On Wednesday, Bitcoin soared beyond $66,000 for the first time, riding a surge of optimism about the financial establishment’s growing acceptance of the digital currency’s rise.
As of 4:15 p.m. Eastern time, one Bitcoin was worth $66,096, after attaining $66,974.77 earlier in the day. It plunged below $30,000 during the summer, the digital currency has roared back to set a new high, surpassing the previous high established in April. According to CoinDesk, the previous all-time high was roughly $64,889 dollars.
The increase has occurred as more businesses, professional investors, and even the government of El Salvador have become interested in Bitcoin, widening its appeal beyond its initial fan base.
The newest crypto converts arrived on Tuesday when the first exchange-traded fund tied to Bitcoin drew a large amount of interest from investors. In a stunning start, shares of the ProShares Bitcoin Strategy ETF changed hands 24.1 million times. Wednesday was busier, with a total trading volume of 29.4 million.
The ETF does not invest in Bitcoin directly. It instead invests in Bitcoin futures, but the industry expects the ETF to attract a new class of investors. Someone with an old-school brokerage account, for example, can buy the ETF without needing to open a crypto trading account.
Because investors are always looking for assets whose prices change independently of everything else in their portfolios, Bitcoin is gaining in popularity. Bitcoin, according to one school of thinking, may shield investors from rising inflation, and other supporters consider it as equivalent to “digital gold,” despite the fact that it has a long track record to back it up.
More enlightened supporters argue that digital assets are simply the future of finance, allowing transactions to bypass middlemen and fees while using a currency that is not governed by any government.
Cryptocurrencies, on the other hand, are still a long way from winning over everyone. Critics point out that they are still not commonly used as payment methods. They also critique the crypto system’s energy consumption, which might result in increased home heating and other utility expenditures during a global economic downturn, as well as more climate-changing emissions. Meanwhile, the most serious concern is the increased regulatory monitoring.
For example, China made Bitcoin transactions illegal last month. Although US regulators haven’t gone quite that far, the chair of the Securities and Exchange Commission has stated that the crypto sector lacks adequate investor protections.
Cryptocurrencies are also known for their wild price volatility. The price of Bitcoin sank by half in three months after it reached a new high.
According to Gil Luria, technology strategist at D.A. Davidson, one of the main reasons for the volatility is the vast variety of possibilities for Bitcoin’s future.
On one hand, Bitcoin’s value could plummet to zero if it proves to be a fad or if it is replaced by another cryptocurrency. On the other hand, it has the potential to usurp the role of the United States dollar and other currencies and become “all of the money.” More people are taking a middle ground attitude, believing that Bitcoin may be useful and have value.
Luria believes the “all of the money” scenario has a 1% chance of happening, but it’s a better chance than he thought five years ago.
“You have to get a lot of people on board to become all of the money,” he said. And, as Bitcoin has broken records and becomes more mainstream over the last year, many new people have become interested in it.
“It becomes a self-fulfilling prophecy the higher Bitcoin goes,” he said.
