The world’s first and the largest cryptocurrency Bitcoin is growing by leaps and bound as crossed the $30,000 mark for the first time on its 12th anniversary on Sunday, January 3rd.
On Sunday, Bitcoin crossed the $30,000 mark and hit a new all-time high (ATH) of more than $34,600. The coin entered 2021 strongly breaking through the $30,000 (£22,000) mark in less than three weeks after first trading above $20,000.
Bitcoin has a history of parabolic history rallies and crashes. In late 2017, the coin surged from $1000 to the previous all-time high (ATH) of $19,908, according to CoinMarketCap. But then crashed to $4,000 by the end of 2018. In mid-March of 2020, it again crashed to below the $4,000 mark from $9,000 levels.
But according to experts, this rally is stable as it the result of growing institutional interest in bitcoin as an asset class, and as its supporters argue that it is supplanting gold as a store of value.
Bitcoin surged about 300% in 2020 but its supporters believe that this is just the beginning. This rally could be followed up by an even stronger performance in 2021 due to its perceived inflation-hedging qualities and potential for quick gains, as well as expectations it would become a mainstream payments method.
Paolo Ardoino, the CTO of cryptocurrency exchange Bitfinex, talking to The Guardian, said that the Bitcoin market had never been more bullish and expected a “very bright future ahead for all bitcoin holders.”
Thomas Lee, Managing Partner and the Head of Research at Fundstrat Global Advisors, talking to CNBC on Wednesday, December 30, expected another 300% growth in 2021. He expects a correction in the first half of the year but also believes that Bitcoin will end 2021 on a high note.
As Crypto Economy previously discussed, governments’ stimulus packages to fight COVID-induced economic shocks forced financial institutions to look for alternatives to hedge against the inflation risks. Bitcoin came up to the task and the US intelligence firm MicroStrategy was the first to set the trend. As reported, the firm has bought more than $1 billion worth of Bitcoin in 2020.
The trend then followed by a slew of companies such as Jack Dorsey’s Square, Guggenheim Partners, Mass Mutual, Canadian firm Mogo, and augmented reality (AR) firm NexTech AR Solutions, buying BTC as their strategic investment. The hedge fund managers Stanley Druckenmiller and Paul Tudor Jones have also backed bitcoin as a financial asset.
Bitcoin also outperformed gold and traditional instruments like bonds and cash, and it will be interesting to see what does Bitcoin brings to the financial sector in 2021.