The price of cryptocurrency Bitcoin soared to fresh highs over the weekend as the ascent of the digital coin continued unabated over the festive season.
On Sunday morning, Bitcoin’s value hit a new record of US$34,366, although as of Monday morning the price had fallen back slightly to just over US$32,024.
Despite that decline, the cryptocurrency has been on a tear over the last 12 months, rising around 336% as investors flocked to Bitcoin as a haven from market volatility during the coronavirus (COVID-19) pandemic, which caused equities to swing wildly and central banks to devalue their currencies in a bid to keep national economies on track.
Bitcoin’s surge in value has also been attributed to signs that its adoption as a payment method is gaining traction among major players in the industry.
In October, online payments giant PayPal said customers will be able to buy and sell Bitcoin and other cryptocurrencies using its platform, as well as being able to pay for goods and services using Bitcoin from merchants that accept PayPal.
However, investors with memories of Bitcoin’s previous surge may be wary of the skyrocketing price, as in late 2017 the crypto reached a then-record high of just over US$18,500 before crashing in early 2018.
Despite this, some have argued that PayPal’s adoption of the cryptocurrency, as well as interest from institutional investors and asset managers considering the crypto as a serious investment, means that the current rally may have more staying power than the bull run of three years ago, which was fuelled more by speculation.
Among the firms benefitting from the recent rise of Bitcoin is software firm MicroStrategy Inc (NASDAQ:MSTR), which has seen the value of its holdings of the digital currency double in value over the last four months, while its market cap has expanded to US$3.6bn currently, up from US$1.3bn in August.
Bitcoin’s boom may also be good news for a collection of crypto firms looking to make their market debut in the coming year, aiming to ride the wave of renewed interest in cryptocurrencies.
Among these is crypto exchange operator, Coinbase Inc, which said in December that it is planning a possible initial public offering (IPO), which if successful will make it the largest crypto exchange listed on the US market with around US$25bn in assets.
Coinbase was valued at US$8bn in a 2018 funding round, however, following the surge in the price of Bitcoin this value has likely ballooned.