By Eurasia Business News – January 2nd, 2021
Over 2020 the value of bitcoin grew by 300% – Photo credit : Pexels
The decentralized cryptocurrency gained nearly 9% on Saturday to surpass $ 30,000 for the first time in its history. Bitcoin rose nearly 50% in December 2020, when it first crossed $ 20,000.
How far will bitcoin go in 2021?
This Saturday for the first time, the most famous cryptocurrency crossed the symbolic threshold of $ 30,000, surpassing the 600 billion capitalization in the process. In December, the currency rose 50% and on one year, the value of a bitcoin soared over 300%. A meteoric rally for the controversial digital asset, which rebounded strongly after a severe crash in March 2020 that saw it lose 25% amid the coronavirus outbreak worldwide.
Bitcoin price was $ 32,904 at 07:00 PM (Paris time) on the Messari platform, a US startup specializing in cryptoasset analysis.
The currency “will be on the road to $50,000 probably in the first quarter of 2021” said Antoni Trenchev, managing partner and co-founder of Nexo in London, in an interview with Bloomberg.
The most popular cryptocurrency (which accounts for more than 70 percent of the global cryptocurrency market) soared in value in the last two weeks of last year : on December 16, Bitcoin surpassed a historic high of $ 20,042, a first record for three years and then continued to update records.
Bitcoin is likely to continue to rise in value as it is used to hedge against inflation and the consequences of pandemics. This bitcoin rush would be favoured in particular by the status of the cryptocurrency against the depreciation of “classic” currencies, by the interest aroused among an increasingly wide range of institutional investors and the growth of the blockchain industry.
Moreover, the adoption of the $ 900 billion Covid-19 stimulus package in the United States on December 22nd may fuel inflation expectations in 2021, which may favour the use of cryptocurrencies by investors as a hedge against inflation. Much like gold, Bitcoin has proven that it can be a substitute for failing currencies, as is the case in Venezuela, Argentina or Turkey. These countries experienced very high inflation rates in 2018 and 2019.
The price of gold is not particularly stable and has its own fluctuations, but it is quite independent of the financial market and is used an hedge in time of economical uncertainties. However, Bitcoin has long been very sensitive to the markets and can be very volatile.
Like many investors, the strategist of the Deutsche Bank, Jim Reid, considers that Bitcoin would be partially replacing gold to hedge dollar risk and inflation. He wrote about it in the firm’s “Imagine 2030” report on 24 alternative ideas for the next 10 years.
At the end of December, SkyBridge Capital, Anthony Scaramucci’s investment fund, has invested $ 182 million in Bitcoin. This purchase follows the creation of a new investment fund entirely dedicated to Bitcoin. Based in New York, this investment fund founded by Anthony Scaramucci has under management more than 9.3 billion dollars. Its investment in Bitcoin is roughly equivalent to 2% of its funds.
The company owned by the former White House Communication Director filed a case with the Securities and Exchange Commission (SEC) to launch a fund dedicated solely to Bitcoin. SkyBridge has notably partnered with Fidelity Digital Assets and Silvergate to successfully launch this fund.
Last October, the payment company Square Inc. bought 4,709 bitcoins, worth approximately $ 50 million. This amount represents about 1% of Square’s total assets as of the end of the second quarter of 2020. Square Inc. listed at the NYSE, explained in a press release that :
“Square believes that cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system, which aligns with the company’s purpose.”
Lastly, the online payment company PayPal Holdings Inc. announced in October that its US customers are now eligible to buy, sell and hold cryptocurrencies directly with PayPal wallet. While it will take a few more months for this service to be accessible to all of its 26 million merchants worldwide, the most fervent supporters of cryptocurrencies say it is only a matter of time before other large companies follow in the footsteps of PayPal.
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