Following a volatile slump Bitcoin prices surge back towards $40,000

Following a volatile slump Bitcoin prices surge back towards $40,000

The ups and downs of Bitcoin continues. Just over a week ago, price of the top cryptocurrency had struck an all-time high of about $42,000 before rapidly falling back to nearly $30,000, a drop of nearly 20 per cent. However, the price has increased rapidly in recent days and is now trading just shy of around $40,000 all over again.

The momentous shifts demonstrates just how volatile bitcoin has become, suggesting that XBT investors hold on tight for what might be a rough, if eventually a profitable ride.

The cryptocurrency is clearly profiting from current weakness in the dollar and the expectation that the Federal Reserve would keep interest rates zero for many more years. That assurance is strengthened by the fact that more established financial institutions such as BLK (BlackRock) are hailing bitcoin a 21st century gold version. 

Bulls also point to the fact that SQ (Square) and PYPL (PayPal) are letting customers purchase and sell bitcoin and that prime investors like Stanley Druckenmiller, Paul Tudor Jones, and Mike Novogratz all back the cryptocurrency.

Chief commercial officer, Kinesis, Jai Bifulco, stated that in 2017, the price hikes were largely driven by retail investors looking to make a quick buck. Today, the substantial growth can largely be attributed to large-scale institutional participation.

Meanwhile, some experts believe that the prices of bitcoin might have more room to run owing to the COVID-19 situation.

Broctagon Fintech Group CEO, Don Guo, stated that COVID-19 induced economic uncertainty has led to an inrush of investors looking to protect assets from conventional market downfalls.

Guo added that as governments offer relief through monetary stimulus, investors are shifting towards bitcoin to protect against the possible inflation.

VP, Research Affiliates and a former bitcoin miner, Alex Pickard stated that in the early stages bitcoin was simply defined as an online cash-based system, but at present times it is much more uncertain.

The recent price increase of Bitcoin might be a classic example of an asset running up too far too quick, but long-term investors are likely to be rewarded handsomely.

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