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Summary
- Bitcoin achieved its record-high value on Thursday last week, reaching US$23,770.85 overnight.
- Higher demand during the coronavirus pandemic could be one of the reasons for the enormous BTC rise, as well as its growing acceptance in the well-established institutions.
- However, some experts warn that Bitcoin’s high volatility could also take a downturn at any time.
Many financial experts had predicted Bitcoin would reach its all-time high worth by the end of this year.
The cryptocurrency reached a whopping US$23,770.85 earlier last week, possibly becoming the most profitable investment in 2020.
Professionals had been waiting for the promising cryptocurrency to exceed US$20,000-mark in recent months, but it seemed that Bitcoin (BTC) could not surpass its record-high of 2017.
However, Thursday last week proved that Bitcoin’s biggest strength is its high volatility, which allowed the cryptocurrency to rise 20 per cent within 24 hours.
READ MORE: Bitcoin surged to an all-time high of US$23,700, High traffic crashed exchanges
What could be the reasons for the sharp spike?
Bitcoin is mostly affected by demand – higher the demand, higher the price for a BTC. However, Bitcoin’s acceptance was not the same prior to the pandemic as it is now.
The coronavirus pandemic demonstrated that millennials are choosing the modern methods of investments. Traditional ways of investments like real estate, equities and others have been utterly proving failure to them over the years. That said, younger people needed a better option. They found their safe haven in cryptocurrencies.
Another major cause for setting an all-time high was Bitcoin’s wider acceptance across established institutions. Ever since PayPal announced buying, holding, and selling Bitcoin via its platform, investors have been finding great potential in crypto coins.
Image Source: © Kalkine Group 2020
DO READ: Will the acceptance of bitcoin grow due to the pandemic?
Is there anything to look out for?
However, Coinbase CEO Brian Armstrong advises new investors to be careful with putting their money in the cryptocurrencies.
At the same time, Bitcoin’s ability to drastically rise in price could also take a downturn in the future. Many shareholders could get excited after seeing the fast-rising price for a BTC. Still, Bitcoin’s high volatility could not be compared to any other existing asset due to its unique nature.
Mr Armstrong added that Bitcoin should not be a short-term investment. He also advises people to hire a professional broker, who would present before them all the risks that could occur over time.
No shareholder should take Mr Armstrong’s advice lightly. The Coinbase CEO predicted a bursting Bitcoin bubble in 2017. His prediction came true as Bitcoin rose to a record high.
The 2020 situation is, however, different than in 2017, as many institutions and corporations have implemented Bitcoin in their stock portfolios.
Mr Armstrong concluded his thoughts by saying that Bitcoin is still a relatively new digital asset and can go through many possible downturns in the long run.
INTERESTING READ: Bitcoin vs Gold: Can the cryptocurrency replace the oldest safe haven?
