The Bitcoin price has passed $41,000 as the world’s largest cryptocurrency continues its record bull run.
As of 17:30 GMT, the Bitcoin price stood at $41,468. Since late November the digital currency has been on a meteoric rise when it stood at $16,500.
It has gained more than 400% in value since the start of 2020 and more than doubled since 16 December when the digital currency hit $20,000 for the first time.
“Bitcoin smashing through $40,000 proves that the Covid crisis is powerful enough to shift the incumbent monetary order,” said Antoni Trenchev, co-founder and CEO of Nexo, a crypto lender.
“The new all-time high is palpable evidence of a major social conversion – a metamorphosis from a dollar-dominated economy to blockchain-based, deflationary, and limitless finance.”
Bitcoin is notoriously volatile and following its bull run in late 2017, when it reached a peak price of $19,783, its value plummeted to below $8,000 in less than two months.
This has caused some to caution that another correction is on the horizon.
However, interest from established institutions and businesses has created a different climate to 2017.
In October 2020 PayPal announced plans to allow cryptocurrency spending via its payment platform in a huge boost for mainstream adoption.
The Bitcoin price has also been driven up by so-called ‘whales’ – those who hold substantial amounts of the cryptocurrency – who snapped up Bitcoin throughout December.
Government financial stimulus is also believed to have driven up the price of Bitcoin. On 30 December, US citizens received a $600 stimulus cheque as part of the $900bn Covid relief bill.
This cash came during the Christmas period when other stock trading was closed, adding further fuel to the cryptocurrency’s upward trajectory. Record low-interest rates have also made Bitcoin an attractive investment alternative.
Financial institutions have been reassesing their stance on the ‘digital gold’, with JPMorgan predicting that Bitcoin could be worth as much as $146,000.
“A Rubicon has been crossed with entirely new categories of institutions and corporate buyers; the retail FOMO [fear of missing out] cycle is starting again. And this is all coming into a macro environment featuring significant tailwinds in the form of growing inflation expectations,” said Nathaniel Whittemore, host of Bitcoin analysis post the Breakdown.
“Compared to other macro hedges, bitcoin is not only cheaper but has much more attractive upside potential Just because the price is more than it was doesn’t mean it isn’t still undervalued.”
Despite renewed interest in Bitcoin, problems with volatility, scalability and high fees remain obstacles to mainstream adoption as a means of exchange rather than an asset form.