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Given Ruvic / Reuters
- Bitcoin hit a new all-time high of over $ 41,000 as the cryptocurrency rally showed few signs of slowing despite recent volatility.
- The Bitcoin and crypto rally has been fueled by record amounts of fiscal and monetary stimulus drowning cash markets, as well as fears about currencies and inflation.
- Critics question whether the rally is sustainable and point to past crashes of Bitcoin, such as when it went from $ 19,000 to $ 4,000 between 2017 and 2019.
- Visit the Business Insider homepage for more stories.
Bitcoin hit a new all-time high of over $ 41,000 on Friday morning, staging a swift rally despite falling below $ 37,000 overnight.
The cryptocurrency has risen 10.75% in the past 24 hours to reach $ 41,361 on the Bitstamp exchange at 6:15 a.m.ET, after hitting $ 40,000 for the first time on Thursday.
The value of Bitcoin has more than doubled over the past month and has risen by over 30% in 2021 so far. It is now over 400% higher than a year ago, according to Bitstamp, leading critics to question the sustainability of the rally.
The rally was motivated by the huge sums of money pumped into economies by governments and central banks amid the coronavirus crisis.
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Bitcoin has already exploded and crashed, dropping from over $ 19,000 in December 2017 to less than $ 4,000 just over a year later.
But his supporters argue that this time is different, pointing to institutional investors and the super-rich who buy the currency. For them, the question is how far the currency can go.
“Investors continue to ride the cryptocurrency bandwagon, which appears to be garnering more interest now that the U.S. economy is poised to stimulate further [Joe] Biden’s first 100 days, ”said Edward Moya, senior market analyst at foreign exchange firm Oanda.
“The stimulus engine for Bitcoin isn’t going away anytime soon,” Moya said. “The increase in COVID infections only means that governments and central banks will continue to remain aggressive with fiscal and monetary stimulus efforts.”
Naeem Aslam, chief market analyst at the Avatrade trading platform, said: “The cryptocurrency has taken a big step and crossed the $ 40,000 level, which made the $ 50,000 price as real as possible.”
Rival cryptocurrency Ethereum rose 6.26% in the past 24 hours to $ 1,269.47 on Friday morning, according to data from Coinbase. It was slightly off an all-time high reached yesterday.
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The roaring rally and bitcoin’s sharp drop of more than 5% to less than $ 37,000 overnight surprised some commentators, with cryptocurrency continuing to sharply divide opinion.
“It could be a huge pump before a massive sell-off in the days to come. The rally we’ve seen is nothing short of amazing,” said Neil Wilson, chief market analyst at the Markets.com trading platform.
“I would be aware of a big crash, but shorting Bitcoin has always been a painful business, like shorting Tesla.”
Bitcoin Bears argue that the huge rally in an asset with no underlying economic fundamentals is doomed to collapse, just like in the past. They also cite government regulations as a danger.
However, Wall Street giant JPMorgan said earlier this week that digital currency could reach $ 146,000 if investors start to take it seriously as a safe-haven asset, as they do for gold.
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