Bitcoin hit a new all-time high in trading Sunday, Dec. 20 as the cryptocurrency’s remarkable December rally continues.
The price of bitcoin hit $24,228.83 at 3:44 p.m. EST before dropping to $23,694.88 as of 9 p.m. Bitcoin first broke through the $24,000 mark briefly on Dec. 19 after having first passing the $20,000 mark for the first time Wednesday and has continued to rise since.
Bitcoin’s rise has been previously attributed to institutional interest in the cryptocurrency as big-name investors such as Paul Tudor Jones and Stanley Druckenmiller moved into bitcoin while tech firms such as Square Inc. and MicroStrategy Inc. have also been buying it.
Tesla Inc. and SpaceX Inc. Chief Executive Officer Elon Musk set tongues wagging in a response to MicroStrategy CEO Michael Saylor, who had suggested that Tesla convert its balance sheet into bitcoin. Instead of ruling out the possibility, Musk responded by saying, “Are such large transactions even possible?”
How serious he was is unknown, but he later went on to tweet “one word: Doge” in reference to Dogecoin, an “altcoin” that is also at times a meme. Musk’s Doge tweet prompted the cryptocurrency to trend on Twitter and rise by 20%. (* Disclosure below.)
Musk’s trolling aside, Goldman Sachs has come out in support of bitcoin. Jeff Currie, global head of commodities research at Goldman Sachs, said last week that bitcoin looks “very similar” to copper because they’re “both risk-on-growth proxies and I would argue that bitcoin is the retail inflation hedge.” Copper is considered a tertiary commodity and is often the third choice for metals-focused investors during economic uncertainty.
How sustainable the current bitcoin rally will be moving into the new year is an entirely different consideration. Bitcoin has traditionally had its ups and downs and the last major rally peaked on Jan. 1, 2017, followed by a precipitous decline in price over the following year. Although bulls talk a good game about how this time is different, more sober market players are warning of the risks.
In a blog post Dec. 17, Coinbase Inc. CEO and co-founder Brian Armstrong warned, specifically citing 2017, that it’s “important to point out that this is not only a time of high volumes, but also price volatility.”
“We cannot emphasize enough how important it is to understand that investing in crypto is not without risk,” Armstrong said. “We… caution investors who may be focusing on short-term speculation and encourage customers to seek out resources and consult financial advisors to better understand the risks associated with investing in cryptocurrencies.”
(*Disclosure: The author currently holds a small amount of Dogecoin.)
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