The digital currency hit a record $ 49,714.66 on Sunday before pulling back a little. Bitcoin is still up 4% in the past 24 hours.
Investors skyrocketed the price of Bitcoin during the pandemic when the Federal Reserve cut interest rates to near zero in March 2020 (and expects them to stay there for a few more years), which weakened the U.S. dollar significantly.
That makes Bitcoin an attractive currency in comparison. The number of bitcoins on the planet is limited, and investors believe that the value of the digital coin can only go up if the supply runs out.
As Bitcoin climbs to an all-time high, big, well-known investors are stocking it up, and big consumer goods companies are adopting it, which is adding to Bitcoin’s valuation soaring.
Last week, Tesla said it could soon accept digital currency as a means of payment for its cars. And Tesla, (( The most valuable auto company on the stock market said it kept some of its cash in Bitcoin instead of traditional currency. On Wednesday, Mastercard announced that it would support “selected cryptocurrencies” directly on its network later this year. This was an important milestone for Bitcoin: )place (( and )PayPal (( Bitcoin trading began recently, but Mastercard will be the most important and important platform for Bitcoin to date. This increases the validity and attractiveness of the cryptocurrency for mainstream investors. For example, a top manager at BlackRock said last year that bitcoin could one day replace gold. And Twitter CEO Jay Z and Jack Dorsey announced on Friday that the couple is launching a Bitcoin development fund. Bitcoin topped $ 20,000 for the first time in December, more than doubling its value in three months. )
Appetite for risk
However, the recent surge in the cryptocurrency is showing signs of collapse – an over-excitement fueled by the fear of missing out, and not just market fundamentals. Take Elon Musk’s sarcastic tweets about Bitcoin rival Dogecoin over the past few months: The digital coin, itself constructed as a cryptocurrency parody, shot up 50% earlier this month after Musk’s tweet. Anthony Scaramucci, Skybridge Capital founder, has a large stake in Bitcoin and a fund aimed at wealthy investors: The SkyBridge Bitcoin Fund LP. But even he says people have to be careful. He told CNN Business last month that this could be a solid addition to the average investor’s portfolio – but you have to have the stomach for it. After all, Bitcoin prices fell below $ 4,000 shortly after reaching an earlier high of just under $ 20,000 in December 2017.
“This could be a top bubble exploding,” Scaramucci told CNN Business in January. “We expect the fund to be volatile and could lose money”
Scaramucci said Bitcoin could suddenly fall 20% to 50%. But he also highlighted Bitcoin’s stamina over the past decade: if you had taken $ 1 and invested 99 cents in cash and one cent in Bitcoin, that investment strategy would have surpassed $ 1 over the past 10 years that was used in the S. & P 500 have been invested, he noted.
“The more likely development is that people can make an enormous amount of money. Bitcoin is not tied to Federal Reserve policies or gold supply issues,” he said. “There is now more demand for Bitcoin than supply. The price should go up.”
Paul R. La Monica of CNN Business contributed to this report.