- Bitcoin is currently valued at US$32,859.70. If one were to only look at its price at the beginning of January and saw it was valued at US$29,111.52, one might assume the price had been gradually rising over the past six months.
- In February, Musk decided to get his electric car company, Tesla, involved in Bitcoin, purchasing a massive US$1.5 billion worth of Bitcoin and adding it to their portfolio.
- The big turning point came on 13 May when Elon Musk announced that Tesla would no longer accept Bitcoin as payment for their products, citing Bitcoin mining’s damage to the environment as his reason.
- In June, China began its crackdown on cryptocurrency trading and mining, leading to further significant price drops for Bitcoin.
For cryptocurrency traders, 2021 has been a wild ride so far. This applies to holders of the world’s largest and most well-known cryptocurrency, Bitcoin. In the first half of the year alone, Bitcoin’s price has seen more ups and downs than a Sydney Tower elevator.
For those holding onto Bitcoin for the long term, however, things haven’t been quite so bad, although now not as good as they were just months ago.
Source: © Dedmityay | Megapixl.com
But how exactly did the world’s digital answer to gold experienced its peaks and valleys?
Let’s dissect that.
At the time of writing, Bitcoin was valued at US$32,859.70. If one were to only look at its price at the beginning of January and saw it was valued at US$29,111.52, one might assume the price had been gradually rising over the past six months.
The fact of the matter is, just two months ago, the price of Bitcoin was nearly double what it is currently.
From January to May, Bitcoin went from strength to strength, carrying many other cryptos along for the ride.
Bitcoin saw unprecedented growth jumping from its 1 January price of US$29,111.52 to its record level of US$63,346.79 on 16 April.
The meteoric rise between these two points was bolstered by a couple of significant events, both of them involving one person: Tesla Chief Executive and SpaceX Founder, Elon Musk.
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Musk’s influence on Bitcoin
From existing on the fringe of finance, Bitcoin has made huge advancements into more mainstream territory this year. Much of this movement must be credited to billionaire, Musk, who, after previously admitting himself that he viewed Bitcoin as an underground currency, eventually began to see the value of a decentralised, peer-to-peer currency, which might one day replace fiat.
As such, it was in February this year when Musk decided to get his electric car company, Tesla, involved in Bitcoin, purchasing a massive US$1.5 billion worth of Bitcoin and adding it to their portfolio. This saw a marked increase in Bitcoin’s price as news of this transaction was heard worldwide, leading more investors to get in on the rapidly rising digital currency.
Bitcoin’s price was bolstered by Tesla again shortly after this when Musk decided in March to allow Tesla to accept Bitcoin as payment for their vehicles.
Musk made his announcement via Twitter, as he usually does, and saw an immediate jump of 4%.
The decision quickly changed people’s perception of Bitcoin from fringe currency to a possible alternative future currency, and, once again, investors from around the world took note, eagerly trying to jump on the swelling wave that was quickly getting larger and larger.
Bitcoin reached its peak in mid-April, having achieved a record high of US$63,346.79 on 16 April.
From that point, things began to go down rapidly for the world’s largest cryptocurrency and many other cryptocurrencies.
The big turning point came on 13 May when Elon Musk announced that Tesla would no longer accept Bitcoin as payment for their products. Musk cited the reason as the harmful impact Bitcoin mining had on the environment, a factor Musk said he previously didn’t know.
Bitcoin mining (Source: © Arinahabich08 | Megapixl.com)
Indeed, research from Cambridge found that the energy used to mine Bitcoins on an annual basis was equal to that of some small countries.
Musk’s announcement saw an instant fall in Bitcoin’s price. In the days following this announcement, speculation was rife that Tesla might have sold off its US$1.5 billion in Bitcoin, which was later found not to be true. Nevertheless, this speculation led to another significant fall as Bitcoin plummeted to US$42,185 on 16 May 2021.
In late May, China began its crackdown on not only cryptocurrency trading but mining as well.
China’s decision to clamp down on bitcoin mining activities came amidst countries worldwide being more mindful of their gas emissions. However, bitcoin mining, which involves a powerful computer solving complex algorithms, uses a great deal of energy. This was at odds with China’s new climate goals.
The Chinese crackdowns led to Bitcoin falling to around US$30,000 by late May – less than half the price of its record high achieved just two months prior.
Since then, Bitcoin has recovered somewhat to around US$33,000. However, if the past year has revealed anything, it’s the vulnerability of Bitcoin and cryptocurrency in general.
It appears it only takes one decision or tweet by the right person, and the price can either soar or plummet. Critics of Bitcoin site this reason, amongst others, as the reason why Bitcoin is an ill-advised investment.
Perhaps it will take more than a billionaire’s approval to make Bitcoin a mainstream currency. Indeed, Paraguay has become the second country after El Salvador to recognise Bitcoin as legal tender. This is perhaps the way of the future for Bitcoin to gain more mainstream recognition and thus gain more stability than the year 2021 has had to offer.