2024-03-06 11:00:00
In the United States, a certain cryptocurrency entrepreneur is celebrating his birthday in prison this week. Someone who once became filthy rich trading bitcoins and other digital currencies, but was ultimately convicted of billions in fraud. The scam by Sam Bankman-Fried, then boss of the world’s largest trading platform FTX, came in 2022 on top of previous scandals in the crypto world. By the end of that year, the problems were so great that it seemed as if the entire sector was doomed.
That now appears to be not so bad. Exactly one day before Bankman-Fried celebrated his 32nd birthday in his cell in New York on Wednesday, bitcoin once more broke its old price record from November 2021. After Bankman-Fried’s fraud, the price had fallen to around 16,000 dollars per coin, on Tuesday you will pay another $69,200 for it.
In retrospect, the coin was not dead, but merely in hibernation. The price started to rise once more last autumn, and it has been going up especially fast since January. Then the American stock exchange watchdog SEC approved so-called bitcoin ETFs, an investment product that allows you to speculate directly in bitcoin without having to purchase one yourself. This saves you the hassle of opening a digital wallet, or with a USB stick that you might lose.
Institutional investors are also investing money in crypto
It also helps that such ETFs are now issued by the world’s largest asset managers, such as Blackrock and Fidelity, which also makes institutional investors less hesitant to put some of their assets into crypto. Since January, Bitcoin has increased in value by more than 60 percent.
In addition, there will soon be fewer new bitcoins in circulation. Such a so-called ‘halving’ is a consequence of how the currency was once designed. The phenomenon, in which the reward received by bitcoin miners is halved at once, occurs roughly once every four years. Each time this has happened before, the price has risen sharply, and investors are already anticipating this.
By the way, the price collapsed once more by 8 percent on Tuesday immediately following the price record. Presumably because many investors had set their computers to automatically sell some of their coins when the $69,200 mark was reached.
For the diehards from the crypto community, it was never a question whether Bitcoin would bounce back. They believe that the current monetary system, in which commercial and central banks handle payment transactions, is doomed to collapse. And that bitcoin, or a variant thereof, will then remain as the only usable means of payment.
In the Netherlands, regarding 10 percent of owners of the coin view it this way, according to research by Marketscope among 4,000 Dutch people this week. That group says they do not buy the coin because of possible returns, but because they think they will need it later. The vast majority (85 percent) are in bitcoin because they think they can get a return from it in the long term.
Gold is also overtaking the old record
Coincidence or not, gold also broke its old price record of $2,135 per troy ounce on Tuesday (that is a measure from the gold world, one troy ounce is regarding 31 grams). Gold and bitcoin are often compared: there is only a limited amount of both available, both require mining (in a gold mine or with computers) and both investments do not yield dividends or interest income.
The fact that gold is currently so high is partly because there is now a lot of demand from China, and because other safe investments such as government bonds seem to be yielding less this year. The fact that exciting elections are coming up in the United States also plays a role, says stock market analyst Corné van Zeijl.
That creates uncertainty, he says, especially now that former President Donald Trump has a good chance of winning. “Then perhaps gold is not such a strange investment, many investors think.”
Also read:
It may soon become easier to invest in bitcoin, and the price is already rising as a result
Will 2024 be the year of bitcoin? In the United States, the sector is eagerly awaiting a new opportunity to invest more easily in the currency, which has already caused the bitcoin price to skyrocket in recent months.
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