Bitcoin has hit a spectacular all-time excessive, reaching a price of US$41,962.36 ($54,390) final week, greater than double the US$20,000 ($25,900) peak of the 2017-18 increase.
With the worldwide financial system nonetheless in disaster, COVID-19 persevering with to rage and political chaos within the US, maybe that is hardly shocking.
According to an article from RMIT professor of economics Jason Potts and PhD candidate Kelsie Nabben, which appeared on The Conversation final week — written when the worth was sitting at a mere US$34,000 ($44,000) — the increase could be boiled down to a few elements. Namely, “ideology, social sentiment and hope”.
The COVID-19 pandemic has additionally undoubtedly fuelled the digital financial system, as new expertise has change into extra accessible to extra folks.
The pandemic has broadly led to elevated adoption of fintech, and a public demand for extra autonomy in relation to their monetary futures.
It stands to motive that curiosity in cryptocurrencies comes merely as an extension of this.
A Forbes article additionally factors to Bitcoin’s rising popularity as ‘digital gold’.
Governments everywhere in the world have reacted to the COVID-19 financial disaster by printing money. In flip, that’s led to traders contemplating Bitcoin as a comparatively protected hedge in opposition to inflation.
In Australia, rates of interest are sitting at an all-time low, inflicting folks to think about investments that would make their cash go additional, in the long term. Again, that’s led to an uptick in use of funding apps equivalent to Spaceship and Superhero.
And, in relation to crypto, the writing was arguably on the wall, with micro-investment enterprise Raiz launching its first Bitcoin investment portfolio again in May.
What about ETH?
Bitcoin is the massive canine of the cryptocurrency world, and the place it succeeds, different cryptocurrencies appear to observe.
Ethereum (ETH) has additionally seen a similarly-shaped spike, hitting a way more modest excessive of US$1,281 ($1,660) — nonetheless shy of its January 2018 peak of US$1,448 ($1,877).
Litecoin can be seeing one thing of a spike, though, once more, it’s numbers are nowhere close to stratospheric.
Back in 2017-18, the crypto increase additionally gave rise to a string of startups in Australia and worldwide launching blockchain-enabled companies and promoting their very own tokens in so-called ‘initial coin offerings’, or ICOs, to fund the expansion of their companies.
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Whether we’ll see a repeat flurry of exercise right here stays to be seen, however we will definitely be keeping track of issues.
Bitcoin was developed to be finite, and subsequently to proceed rising in worth over time.
“Nakamoto’s audacious experiment in digital currency is working as intended,” Potts and Nabben write.
“What really deserves attention now is what this means for our digital, physical and social futures.”
— Elon Musk (@elonmusk) January 9, 2021