The global cryptocurrency market has grown by nearly $100 billion over the last week, as the price of bitcoin nears an all-time high.
Bitcoin now ranks as the 19th most valuable asset in the world, ahead of Mastercard and PayPal.
Its current market cap of $356 billion, up from $130bn this time last year, puts it on par with the world’s biggest investment bank, JPMorgan Chase.
Bitcoin represents less than two thirds of the overall cryptocurrency market, which counts nearly 4,000 different altcoins and digital currencies.
Among the biggest are Ethereum (ether), Ripple (XRP), bitcoin cash and litecoin – all of which have experienced considerable gains over the last seven days.
XRP has more than doubled in price since last week, while both ether and bitcoin cash have risen in value by more than a third.
The extreme market movement has been boosted by strong institutional demand, with top hedge funds and money managers increasingly viewing cryptocurrency as a safe haven asset during times of economic and geopolitical turmoil. Bitcoin has also been boosted by PayPal’s recent announcement to make cryptocurrency available to its 346 million customers worldwide in early 2021.
All non-stablecoins – cryptocurrencies tied to fiat currency – continue to be blighted by volatility and remain a speculative asset, though some analysts believe bitcoin in particular is becoming a form of digital gold.
As with many other cryptocurrencies, bitcoin has a finite supply that limits the number of btc in existence to just 21 million. This means its price cannot be artificially deflated through measures like quantitative easing.
Bitcoin was trading above $19,000 on Tuesday – less than $1,000 off the all-time high it reached in December 2017. As recently as March, one bitcoin could be purchased for less than $5,000.
Many analysts have predicted new record highs before the end of the year, while some claim that current trends suggest there will be more massive gains in 2021.
Bitcoin’s volatile history in picturesShow all 81/8Bitcoin’s volatile history in pictures
Bitcoin’s volatile history in picturesSatoshi Nakamoto creates the first bitcoin block in 2009
On 3 January, 2009, the genesis block of bitcoin appeared. It came less than a year after the pseudonymous creator Satoshi Nakamoto detailed the cryptocurrency in a paper titled ‘Bitcoin: A peer-to-Peer Electronic Cash System’
Bitcoin’s volatile history in picturesBitcoin is used as a currency for the first time
On 22 May, 2010, the first ever real-world bitcoin transaction took place. Lazlo Hanyecz bought two pizzas for 10,000 bitcoins – the equivalent of $90 million at today’s prices
Bitcoin’s volatile history in picturesSilk Road opens for business
Bitcoin soon gained notoriety for its use on the dark web. The Silk Road marketplace, established in 2011, was the first of hundreds of sites to offer illegal drugs and services in exchange for bitcoin
Bitcoin’s volatile history in picturesThe first bitcoin ATM appears
On 29 October, 2013, the first ever bitcoin ATM was installed in a coffee shop in Vancouver, Canada. The machine allowed people to exchange bitcoins for cash
Bitcoin’s volatile history in picturesThe fall of MtGox
The world’s biggest bitcoin exchange, MtGox, filed for bankruptcy in February 2014 after losing almost 750,000 of its customers bitcoins. At the time, this was around 7 per cent of all bitcoins and the market inevitably crashed
Bitcoin’s volatile history in picturesWould the real Satoshi Nakamoto please stand up
In 2015, Australian police raided the home of Craig Wright after the entrepreneur claimed he was Satoshi Nakamoto. He later rescinded the claim
Bitcoin’s volatile history in picturesBitcoin’s big split
On 1 August, 2017, an unresolvable dispute within the bitcoin community saw the network split. The fork of bitcoin’s underlying blockchain technology spawned a new cryptocurrency: Bitcoin cash
Bitcoin’s volatile history in picturesBitcoin’s price sky rockets
Towards the end of 2017, the price of bitcoin surged to almost $20,000. This represented a 1,300 per cent increase from its price at the start of the year
Sergey Nazarov, co-founder of multi-billion dollar blockchain project Chainlink, is among those predicting bitcoin will quintuple in value over the next 12 months.
“There are two primary forces that we will see drive bitcoin over $100,000,” he told The Independent.
“Bitcoin is a natural safe haven for those seeking shelter from rapidly increasing central bank money printing and the inflation that everyone agrees is already increasing.
“The second, lesser-known factor that is accelerating bitcoin’s growth is the growing demand for yield and the rise of ‘decentralized finance’, or ‘DeFi’, the fastest growing sector within the blockchain industry… Now, for the first time in bitcoin’s history and coinciding with a historic rise in inflation; not only can someone buy bitcoin as a hedge against inflation, they’re also able to receive a far larger APR/yield than they can expect to get from traditional finance.”