Bitcoin soars past $40,000 for the first time

The price of the cryptocurrency bitcoin soared past $40,000 for the first time on Thursday, rising $10,000 in just five days. The price of bitcoin was $41,130 at roughly 1800 GMT, having jumped 9.75 per cent during the trading session. The cryptocurrency, which has known wild swings in value, passed $30,000 for the first time just on Saturday.

“With a perfectly inelastic supply, any change in demand for Bitcoin can only be reflected in price. On the demand side, the US democratic sweep means the money printer is going to be working overtime in 2021, further debasing the dollar and making the case for Bitcoin as a hedge to inflation and reckless monetary policy. There is also a supply side liquidity crisis as around 60 per cent of Bitcoin supply hasn’t moved in over a year. Expect insane volatility this year, but Bitcoin is the future of money,” added Talal Tabbaa, coo and co-founder, Jibrel Network.

The total market value of all cryptocurrencies rose above $1 trillion for the first time on Thursday as Bitcoin surged to a record high, according to data by crypto coin trackers CoinMarketCap and CoinGecko. Bitcoin has jumped more than 900 per cent to $38,655 on Thursday, from $3,850 in March, as governments increase speeding to blunt the economic impact of the coronavirus. This has raised fears about rising inflation and US dollar debasement.

Arshad Khan, co-founder and CEO of Arabian Bourse, said: “The continued strong rally in the bitcoin prices along with other Altcoins shows the previous hikes are here to stay. In the past 24 hours BTC prices shot up by 14 per cent. Compare this to 50 per cent increase in the last full month. Disturbing events in US are further driving money into safe heaven assets which are acting as a hedge against weakening dollar. The recent US OCC decision to allow US banks to use public blockchains and dollar-backed stablecoins as a settlement infrastructure in the financial system has strengthened the confidence in cryptocurrencies specially XRP which saw 45 per cent increase in last 24 hours.”

The cryptocurrency is also gaining traction with more mainstream investors who are increasingly convinced that Bitcoin will be a long-lasting asset, and not a speculative bubble as some analysts and investors fear.

Sergey Nazarov, co-founder of Chainlink, a decentralied network that provides data to smart contracts on the blockchain, said that there is a “lack of faith in traditional institutions that is driving this large rally towards cryptoassets.”

“While outsiders may view the cryptocurrency industry being valued at over $1 trillion as an incredibly significant milestone, in actuality our space is still in one of its very early stages of development and growth,” Nazarov said.

Gabriel Abed, co-founder Digital Asset Capital Management, said: "Institutional investors have arrived to the world of cryptocurrencies and their presence is very well seen in the price appreciation we have seen over the last few months. We have seen more activity in the last 3 months than we have seen over the last three years with no signs in slowing down. The drawback is always being aware that while the market is performing exceptionally well a correction is due at some point."

The market cap of all cryptocurrencies rose 10 per cent to $1.042 trillion on Thursday, data from CoinMarketCap shows. Bitcoin accounts for around 69 per cent of the total market cap of the total. It is followed by Ethereum with a 13 per cent share.

Khurram Shroff, chairman of the IBC group, said: “Led by what has happened in the US has put for the first time instability in Capitol Hill in Washington DC and institutional uptake not only in US, Canada but globally has surged. Family office, governments, municipalities, billionaire, millionaire, doctor, lawyer accountant all are investing in Bitcoin my phone has not stopped ringing.”

— With inputs from agencies, sandhya@khaleejtimes.com