The value of Bitcoin has broken the $22,000-barrier for the first time in its history, representing a 175% rise during 2020, after receiving strong backing from investors and institutional giants.
The last time the cryptocurrency reached such heights was during the 2017 craze that also saw it enter the mainstream lexicon, skimming the $20,000 barrier but never comfortably breaking through, eventually crashing shortly after during a mass sell-off. Bitcoin reached $20,000 on Wednesday after a sudden and sharp rise, with its value now surpassing $22,000, and rising, at the time of writing.
Wider economic conditions, backing from investors, and encouraging signs the cryptocurrency is being adopted by mainstream platforms and services such as PayPal have all combined over the past few months, helping the digital currency break a new milestone that some doubted would happen in 2020.
“Bitcoin was trading at $700 just a few years ago and this is a cryptocurrency that was invented 11 years ago,” said Coindesk’s first move editor, Bradley Keoun, speaking on Coindesk Daily. “People are buying it for all kinds of reasons.
“It was invented to be a peer-to-peer payment system on a distributed ledger and this year, with the federal reserve and central banks printing trillions of dollars of stimulus money, Bitcoin took on this narrative as an “inflation hedge. And over the past few months, we’ve just seen more and more big Wall Street firms getting into Bitcoin and there’s a limited supply, so the price just keeps going up.”
The lack of mainstream support, or buy-in, for the cryptocurrency is one of the reasons Bitcoin has fluctuated so heavily in the past, and one of the reasons it surged but then immediately crashed during 2017.
The landscape is measurably different three years on, with Bitcoin passing several major hurdles that may help it maintain its current strength and potentially rise further. One encouraging sign of its newfound resilience, according to Coindesk’s markets managing editor, Laurence Lewitinn, is the fact that it had to overcome thousands of sell orders.
This is in addition to huge names in the financial services industry hoping to jump onto the bandwagon of a proven investment. The UK-based Ruffer Investments, for example, purchased a staggering $744 million worth of Bitcoin in November.
Breaking the $20,000 barrier for the first time, too, will be considered a psychological boost following how close it came to reaching this valuation in 2017, as it gives investors confidence that Bitcoin is an asset that can retain its value.
There’s also encouragement that not just Bitcoin but the wider cryptocurrency landscape may enjoy more stability and user adoption during 2021, chiefly due to services developed by major platforms such as Facebook and PayPal.
Facebook, for example, is pressing ahead with the launch of its own Libra stablecoin in 2021, despite being heavily challenged by regulators and abandoned by its initial backers.
Paypal recently launched functionality on its platform to support the buying and selling of Bitcoin, Ether, and other cryptocurrencies. This precedes the tokens being used to make transactions with the company’s 26 million registered merchants.
