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Bitcoin has been on a wild ride in the last four months in which the globally popular crypto asset has breached multiple record highs. In the last 12 months, bitcoin has leapfrogged various levels defying the coronavirus-led turbulence in the financial market and outperforming all other asset classes, be it the gold, currencies, crude oil, large-cap shares etc.
Bitcoin @ 41,100
Bitcoin prices have quadrupled in the last four months. The digital currency scaled a lifetime peak of $41,100 on Friday around 1048 GMT. As per the latest trading data of Binance, bitcoin was trading comfortably above $40,000 with gains of more than 10 per cent as compared to its 24-hour old traded price. Notably, bitcoin has breached the psychological mark of $40,000 in the late-night trades on 7 January.
(Image source: ©Kalkine Group 2020)
Also Read: Cryptocurrency Market Cap Crosses $1 Trillion As Bitcoin Soars Above $40,000
On 8 January, bitcoin pared some of its gains, retreating from the all-time highs as the trading progressed. In the last 24 hours, about 29,403.03 units of bitcoin have exchanged hands translating into a total traded turnover of approximately $1.13 billion on Binance.
Bitcoin has doubled in less than a month’s time. It had surpassed the psychological levels of $30,000 and $20,000 for the first time on 2 January and 16 December, respectively, breaking the long-time record high of around $19,666. JPMorgan has recently predicted that bitcoin can reach a level close to $146,000 if it manages to get a status of safe-haven asset.
Bitcoin (8 Jan)
(Source: EODHD/Others, Thomson Reuters)
Bitcoin (1-week)
(Source: EODHD/Others, Thomson Reuters)
Alternative to gold
With the unprecedented price rise of bitcoin, the crypto asset is now being considered as a financial instrument to hedge the portfolio against the inflation and a foreseeable alternative to the conventional safe-haven assets gold and US dollar, as far as the returns are concerned. Following the low interest rate regime across the world and deprived state of businesses being reflected by the respective stock prices, bitcoin has been considered as a brighter investment option by a large section of retail investors.
Will the rally continue?
Oscillating near the all-time high of around $41,100, given the successive rallies, bitcoin has been making and breaking the records in the new year. Nevertheless, the worries with regard to the cryptocurrency market and the meaningless underlying value of other cryptocurrencies, is still something to worry about. The UK’s ruling of banning the exposure of retail customers to cryptocurrency derivatives has already come into place from 6 January.
According to the Financial Conduct Authority (FCA), the capital market regulator of the UK, the heightened volatility of crypto assets, inadequate understanding of cryptocurrencies, the prevalence of cyber theft and the questioning value of the underlying asset are some of the primary factors that guided the regulatory body to impose a ban on the sale of derivatives product to retail clientele.
According to some experts, the crypto assets may not see a straight rise from here and possible correction can be there in the near future. While some say that the cryptocurrency market is on its way of stabilisation and the digital currencies will be surely considered as a definitive investment bet in the times to come.
(Source: EODHD/Others, Thomson Reuters)
