Bitcoin price rises again above $4,000 – but will it hit a new all-time high?

Bitcoin’s value has once again risen above $4,000 per coin – but will we see the bubble burst any time soon?

The price of the virtual currency, which hit a record high of $4,500 (£3,492) last week, has jumped up to $4,276 to recover from yesterday’s seven-day low.

Bitcoin’s value has soared over the past 12 months, with its record-breaking rally coming after its recent split into two separate cryptocurrencies.

FAQ | Bitcoin What is it?

A digital currency, used to make payments of any value without fees. It runs on the blockchain, a decentralised ledger kept running by “miners” whose powerful computers crunch transactions and are rewarded in bitcoins

Who invented it?

Satoshi Nakamoto, a secretive internet user, invented bitcoin in 2008 before it went online in 2009. Many attempts to identify Satoshi have been made without conclusive proof

What’s it for?

People see value in money free from government control and the fees banks charge; as well as the blockchain, to verify transactions. Bitcoin has been seen as a tool for private, anonymous transactions, and it’s the payment of choice for drug deals and other illegal purchases

Is it worth anything?

Yes. As of July 2017, there were around 16.5m bitcoins in circulation. In March 2017, the value of a Bitcoin, at $1,268, exceeded that of an ounce of gold ($1,233) for the first time.

 

What is Bitcoin Cash?

In August 2017, the blockchain forked to support another cryptocurrency, Bitcoin Cash, which is optimised slightly differently. People who held Bitcoin received an equal value of Bitcoin Cash following this ‘hard fork.

Wall Street strategist Tom Lee believes the price of Bitcoin, which surpassed gold for the first time in March, could eventually rise by another 40 per cent.

He believes the price will continue to rise should the first bitcoin exchange-traded fund receive US regulatory approval.

Lee said in a recent note to clients that it “implies significant rise [in] institutional holdings of Bitcoin in next 6-8 months given recent approvals.”

“No doubt, this will lead to an increase in overall transaction volumes for bitcoin.”

He added: “We see bitcoin as gaining from institutional sponsorship, improving transaction platforms and ultimately, greater public adoption.

Could bitcoin replace gold?  CREDIT: GETTY 

Lee predicts cryptocurrencies could eventually replace gold, although warned investors about a highly volatile market in the short-term.

“We believe one of the drivers [of bitcoin] is cryptocurrencies are cannibalizing demand for gold,” he said.

“Based on this premise, we take a stab at establishing valuation framework for bitcoin. Based on our model, we estimate that bitcoin’s value per unit could be $20,000 to $55,000 by 2022.

Bitcoin’s price has increased so much that £2,000 invested five years ago would make you a millionaire today.

November will be a crucial month for bitcoin, when a new technology called Segwit2x moves some of bitcoin’s transaction data outside of the block and on to a parallel track to allow more transactions to take place.

‘Bitcoin will become the new gold’

 

 

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