CRYPTOCURRENCY: Price of Bitcoin Reaches all-time High in 2020
The price of Bitcoin, the world’s most popular cryptocurrency, has grown four times from nearly US$5,000 in March 2020 to an all-time high of over US$20,000 in December 2020.
According to GlobalData, the changing monetary policies, rising inflation and the impact of the COVID-19 pandemic has shifted investors focus to alternative asset classes like cryptocurrencies to secure the value of their capital.
“Unlike Bitcoin’s previous surge in 2017, which was driven by the hype among retail investors, the latest increase is a result of institutional investors, public companies, major banks and payment companies turning their investment focus to digital assets like cryptocurrency,” says Kiran Raj, principal disruptive tech analyst at GlobalData.
“Institutional investors such as Ark Invest, Addison Capital and Horizon Kinetic have recently invested in Grayscale Bitcoin Trust, a cryptocurrency investment trust from NY-based Grayscale Investments, which now manages over US$13bn in crypto assets,” he says.
“Public companies also piqued their interest in American financial services, merchant services aggregator Square, Inc., which has recently converted US$50m worth of cash into Bitcoin to represent about 1% of its total assets.”
Raj says big banks such as Citibank and Bank of America are increasingly positive about crypto assets.
“Analysts at Citibank forecast Bitcoin’s price to cross US$300,000 by the end of 2021 and refer it as the 21st-century gold,” he says.
Online payments company PayPal recently introduced a new service allowing its merchants and end-users to buy, sell, hold and accept Bitcoin and other cryptocurrencies.
According to GlobalData, other reasons for the price appreciation of Bitcoin include the continuous rollout of financial stimulus by various governments to help overcome the COVID-19 pandemic-induced economic crisis.
“These packages reduce the dollar’s purchasing power and increase inflation, which is increasing the investor appetite for alternative investment assets like cryptocurrency,” says Raj.
“Given its inflation-hedging potential, increasing confidence of institutional investors and banks, growing adoption as a mainstream payment method, and the rise of decentralised finance, Bitcoin’s massive rally will be sustained through 2021,” he adds.
In July, the Twitter accounts of several prominent public figures including Bill Gates, Joe Biden, Elon Musk and Bill Gates had been hacked by cyber-attackers with the intention of spreading a bitcoin-related scam.
As part of the attack, the hacked accounts each tweeted a link and implored their millions of followers to send bitcoin to the address, promising to send back double the donated amount back to the sender.
More than 11 BTC – equivalent to over US$100,000 – was collected by the bitcoin wallet linked to the address in the attack as the scam spread around Twitter this morning, according to the Guardian.
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