Total Market Cap
The increase in the price of Bitcoin can be traced to the weakness of the US Dollar. The US Dollar has been weak for most of last year and it continues to decline as we enter into the new year. Bitcoin hit the $40k yesterday, Jan. 8, but that is history as the largest cryptocurrency blast above $41k and likely to rise further.
After jumping as much as 11% to $40, 394, the price of Bitcoin fell around $3,500 in about half an hour and continues to fluctuate. Prices vacillated before it continues to blast up. Bitcoin is currently trading at $41,729 and it looks like the moon is not far anymore with the current momentum. The digital currency has more than doubled in less than a month.
Bloomberg reported that "Strategists have cited demand from speculative retail traders, trend-following quant funds, the rich and even institutional investors as among the reasons for the surge. The total market value of cryptocurrencies climbed beyond $1 trillion for the first time Thursday."
Antoni Trenchev, the co-founder and managing partner of Nexo, a crypto lender said “Bitcoin continues to defy all expectations and doubters. It’s leaving all other assets trailing in its wake like it’s done a year in, year out for the past decade.”
Bitcoin accounts for about two-thirds of cryptocurrency market value, followed by Ether at about 13%, according to CoinGecko data.
Coinbase Inc., the largest U.S. digital exchange, said it’s experiencing “connectivity issues” on both the website and mobile app for a second day.
"Digital coins are jumping in a world awash with fiscal and monetary stimulus, even as some commentators fear an inevitable bust and others question the basic integrity of crypto markets. Proponents of Bitcoin argue it offers a hedge against dollar weakness and the risk of faster inflation, a bit like gold, while critics decry the intellectual soundness of comparing the two assets," Bloomberg.
Comparing the largest cryptocurrency to an asset like Gold has been a major conversation among financial analyst and investors ever since cryptos started performing. Gold is known to have been a store of value before the existence of note currency and it's been a safe-haven for investors to store and save funds at the same time. The price of Gold is regulated by the SEC and it's known to be the go-to asset even when the US Dollar is not performing. The price of Gold hit $2k per ounce mid last year and it's been on a long term pullback since then, but it's most likely it will surpass the $2k mark this year.
Something To Ponder About: Has Bitcoin come to beat Gold as a store of Value? With the price of the two assets depending on the value of the US Dollar, what is FED going to do about the losing value of the Dollar? Will investors liquidate their Gold holdings and convert them to Bitcoin?
Featured Image from Shutterstock Price
Tobi is a full time day/swing trader with 3 years’ experience in the currency and commodity market. He is interested in cryptocurrencies in combination to the current financial system. Tobi holds a bachelor's degree in Agriculture.