In November 2017,last of us sex video after an absolutely massive, two-month rally, Bitcoin passed $10,000 for the first time. And then, over the next 20 days, it soared even higher, reaching a price of $19,665 and roughly $329 billion in market cap, according to CoinGecko.
The moment felt unreal. How did this new digital asset rise from being an obscure playground for cryptography geeks to something worth hundreds of billions? Even then, unable to categorize it as a currency or commodity, many experts prophesied Bitcoin's demise, comparing it to the Dutch tulip mania of the 1630s, when tulip bulb prices reached exorbitant highs only to collapse.
For a while, it appeared they were right. The price of Bitcoin shrunk to below $7,000 in the next three months, its long-term graph truly resembling that of a classic bubble. But the graph doesn't look like that anymore.
You May Also Like
When Bitcoin first reached $1,000, back in 2013, it looked like a bubble. In 2018, it looked like a bubble. But it keeps coming back, and bubbles don't typically do that. Credit: coingecko After reaching a low of roughly $3,000 in late 2018, the price of Bitcoin started to climb. And in the past couple of months, this rise has accelerated, propelling the price to $18,605 at writing time. As happens every time Bitcoin starts going parabolic, everyone's asking the same question: Are things different this time around?
They very well may be. Tulip bulbs never made a resurgence after that 17th-century bubble, but Bitcoin is back. In fact, its market cap has already surpassed its all-time high because more bitcoins have been mined, adding to the total supply. It's currently sitting at $346 billion.
There are many factors contributing to Bitcoin's rise. On the most basic level, Bitcoin hasn't changed much: It's not the fastest way to send value from one place to another — centralized financial institutions can be faster, as can some newer cryptocurrencies — but it's still extremely reliable, and hasn't had a serious security issue in a decade.
But the world around Bitcoin has changed drastically in recent months, and that works in the cryptocurrency's favor.
Charles Hayter, CEO of CryptoCompare, told Mashable in an email, "the gap between the crypto world and traditional financial institutions has closed dramatically." The "incumbent players are now fine to play in the digital asset markets. The narrative that is compelling them to do so is this alignment of Covid, monetary policy and political disarray globally."
This Tweet is currently unavailable. It might be loading or has been removed.
Companies like MicroStrategy and Square have started buying Bitcoin, partly because they think it's something they should have on their balance sheet. Grayscale, a digital asset investment company, keeps sucking up massive amounts of Bitcoin. PayPal has finally confirmed years of rumors by adding crypto assets to its services. Perhaps the most bullish are the comments from massive asset management companies like Fidelity and BlackRock, which have acknowledged Bitcoin as a valuable investment opportunity.
This Tweet is currently unavailable. It might be loading or has been removed.
"The convergence of rapid institutional bitcoin adoption and new retail on-ramps is building a perfect storm for an extension into uncharted new highs in the coming months and years," Seamus Donoghue, VP of sales and business development at METACO, told Mashable.
And celebrity endorsements can't hurt, either — in the past few days, we've seen rapper Logicand actress Maisie Williamspublicly say they bought Bitcoin.
Finally, the third halving — an event, built into Bitcoin's programming, that reduced the amount of bitcoins generated — is behind us. Historically, price increases have followed halvings.
This Tweet is currently unavailable. It might be loading or has been removed.
For Bitcoin, the main issues that plagued it from the beginning remain — its volatility and relative slowness don't make it a particularly good digital currency. Retailers, for the most part, haven't accepted Bitcoin as a means of payment, and they probably won't change their mind soon. And in times of crisis, Bitcoin wasn't the safe haven many expected it to be.
But now, perhaps more than ever before, proponents are clinging to the "digital gold" narrative, which describes Bitcoin as a hedge against inflation and erratic monetary policies. In some ways, Bitcoin is better than gold — it's easier to access and easier to transfer. And, at a time when the U.S. and Europe are printing more fiat money to ease the effects of the COVID-19 pandemic, digital gold sounds like a good thing to have.
Stocks have been rallying in the past few months, and gold has done well, but Bitcoin has been rallying much faster. Credit: cryptocompare "Bitcoin as a form of digital gold is also seeing its time in the sun as we see the floodgates open on monetary policy. Closing the sluice gate is more difficult than opening it," said Hayter.
In a report called "QE Dystopia & Corporate Bitcoin Adoption," James Butterfill, an investment strategist at CoinShares, also noted that corporate treasuries are having trouble finding a suitable hedge against negative interest rates on cash deposits.
"As a consequence of burgeoning negative interest rates and a poor US dollar outlook, corporate treasury management departments are beginning to source alternative stores of value/reserve assets ... Currently, the two main viable low-correlation liquid stores of value are gold and Bitcoin," he wrote.
SEE ALSO: Maisie Williams asks about Bitcoin. Memefest ensues, and Elon Musk joins the party.While things do look aligned for Bitcoin to moon (a massive price rise in crypto lingo), just how high that moon will be is hard to predict. Investor and Bitcoin bull Mike Novogratz thinks the price might go as high as $65,000, and there are people who are far more optimistic than him. But then again, Novogratz expected Bitcoin to reach $40,000 in 2018, which turned out to be very far from the truth.
This Tweet is currently unavailable. It might be loading or has been removed.
The most optimistic Bitcoiners, however, will tell you that you needn't worry about the price at all. When the time comes, you won't have to sell Bitcoin — or so goes the meme, implying that Bitcoin will one day replace fiat money.
Investors should be wary of jumping onto the bandwagon. Cryptocurrencies have a way of sharply dropping in price, especially after a big movement upwards. But should Bitcoin once again surpass its all-time-high and soar above $20,000, it's going to be even harder to dismiss it as a mere bubble.
Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.
Topics Bitcoin Cryptocurrency