Bitcoin is in the middle of a bull run that could see it rise above the psychologically important level of $10,000 per token for a sustained period.
The world’s largest cryptocurrency briefly climbed as high as $10,194 on Sunday in trading, before falling back to its current level of $9,877 on the Luxembourg-based Bitstamp exchange early on Monday afternoon.
The surge, 40 per cent higher than its price at the start of the year, is fuelled by investors looking for a safe haven against Coronavirus, which threatens to slow world trade.
This trading push is also a reaction against token’s periodical halving due in May, which will see the mining reward cut to 6.25 bitcoin from 12.5. The idea is that this will make bitcoin worth twice what it is now, say some analysts. Although others maintain there is no guarantee this will happen with assets as volatile as digital coins.
This is only the third time the cryptocurrency has broken the $10,000 mark. It last passed that level in September, however, the month that followed saw it lose more than 14 per cent.
Bitcoin at $100,000 by next year
The first time it broke through this barrier was in 2017 before rising to a record of just under $20,000 in February of that year. More recently, the token broke above $10,000 in mid-2019 before falling back. Inbetween, the volatile token crashed to a low of $3,196 in December 2018.
The total value of bitcoins in circulation is $178bn, representing almost two-thirds of the overall crypto market, according to database Coinmarketcap. This means bitcoin is valued more highly than the largest company in the FTSE 100, oil giant Royal Dutch Shell, and is larger than all but one member of Europe’s Eurofirst 100 index, luxury goods maker LVMH, and would rank 32nd by market cap on America’s S&P 500 equity benchmark. There are more than 2,300 different digital currencies listed on Coinmarketcap.
AJ Bell investment director Russ Mould said: “Some may view this as another reason to view markets as worryingly frothy, as a plentiful supply of liquidity from central banks keeps them bubbling along. Others will argue the cryptocurrency’s return to favour affirms their view that central banks’ continued provision of cheap cash is only serving to debase existing currencies and open the way to a major reset.”
While, Anthony Pompliano, the cofounder of US bitcoin and crypto investment group Morgan Creek Digital, said on Twitter: “I still think that bitcoin will hit $100,000 by end of December 2021.” He added that its “fixed supply” and “increasing demand” will continue to push up the token.
There have already been two bitcoin halvings since the currency was launched in 2009, one in 2012 and another in 2016. Bitcoin halvings are roughly scheduled once every four years until the maximum supply of 21 million bitcoins in circulation—something that is not expected to happen until well into the next century.