After a challenging couple of months, Bitcoin bounces back, hitting above $60,000 on Wednesday. Despite regulations left and right surrounding the cryptocurrency, it has managed to rise above it due to investors’ optimism on what is viewed as increasing acceptance of the digital currency.
As of 4:15 EST on Wednesday, One Bitcoin stood at $66,096, amid dismal performance during the summer when it was valued below $30,000. It even beat its record of $64,889, based on CoinDesk data.
Surge ongoing, converts increasing
Bitcoin is enjoying a surge in value, thanks to a perception of the cryptocurrency’s increasing legitimacy. As a result, more businesses, investors, and even governments such as El Salvador are tied to Bitcoin.
It appears that its user base is expanding into new converts. Recently, investors gave a thumbs up to the first exchange-traded fund (ETF) tied to Bitcoin. The ProShares Bitcoin Strategy ETF’s launch was a resounding success, ending to the tune of 29.4 million trading volume.
While the ETC is not a direct investor of Bitcoin, it represents a new class of investors that will benefit the cryptocurrency in the future. One can buy the ETC without necessarily opening a Bitcoin trading account.
There are many explanations for this Bitcoin surge. For one, investors’ interests are piqued as they search for asset classes with prices moving independently of other assets in their portfolios. Secondly, Bitcoin is thought to be immune from high inflation. While this perception has not been proven, fans of the cryptocurrency nevertheless consider Bitcoin ‘digital gold.’
Still, the more articulate Bitcoin aficionados insist that the cryptocurrency is ‘the future of finance,’ and it is high time to transact with it. With cryptocurrency, go-betweens and exorbitant transaction fees can be avoided. Any allegiance to a government is also removed.
Not winning hearts and minds, still
While Bitcoin appears to be enjoying a comeback recently, the cryptocurrency still has a long way to go in winning hearts and minds. Critics are quick to point out that Bitcoins remain a marginal payment channel.
Other critics hurl that it is generally non-eco-friendly, considering the sheer amount of energy that is used for mining. In addition, bitcoin mining has been accused of poor carbon footprint, contributing to greenhouse gas emissions, precipitating regulations against it.
For instance, China implemented a ban against Bitcoin transactions due to climate change issues. While the United States has not gone to that extent, the US Securities and Exchange Commission chair offers very little protection to investors.
Another serious concern about Bitcoin is its high volatility. That is, it can go from hero to zero. For example, when last it set a record high, its value dipped by half in only three months.
D.A. Davidson technology strategist Gil Luria considered that Bitcoin’s volatility might be explained by its ‘fad’ tag. As a result, Luria thinks it highly unlikely that the cryptocurrency will usurp the US dollar anytime soon.
Still, people’s perceptions of Bitcoin are improving, and many occupy an ambiguous position on it, thinking that it is still useful.