Price Bitcoin rises to record high

The price of Bitcoin rose to a record high on Wednesday. At its peak, the price was on $67,000, a few percent more than the old record set in April. In euros, the price of the virtual currency rose to €57,000, more than doubling compared to three months ago. The cryptocurrency is benefiting from favorable sentiment, as high inflation is causing more people to see Bitcoin as an attractive alternative means of savings.

Many other cryptocurrencies are also rising in price. According to Coinmarketcap, there are currently around 13,000 different coins in circulation, which together have a market value of $2.6 trillion. That's up from the previous record of nearly $2.5 trillion set in May. Despite the large number of cryptocurrencies, there are only a few that have a significant market value. For example, the ten largest currencies currently account for almost 85% of the total value of this market.

Bitcoin has been around since 2009, but it's starting to become more mainstream. The global network of Bitcoin already has more than 200 million active users and the market value of all crypto coins combined is already comparable to that of a company like Apple. There are also more and more tech companies that are embracing virtual currencies as an alternative means of payment. For example, users of PayPal can buy crypto coins via the app and Twitter offers its users the opportunity to reward each other in Bitcoin. Facebook also wants to Using Cryptocurrencies to facilitate payments between users of the platform.

Price movements Bitcoin over the past twelve months (Source: Coindesk)

Bitcoin as ETF

The virtual currency is also becoming more integrated in the investment world. This week, ProShares launched the first Bitcoin ETF with a listing on the American stock exchange. This fund allows investors to take a position in Bitcoin, without having to buy the cryptocurrency itself and store it on a wallet. By the way, this new ETF uses futures contracts to hedge positions in Bitcoin. It is therefore an investment product that is at odds with the philosophy of Bitcoin, which is to hold coins in-house and eliminate counterparty risk.

With this Bitcoin ETF, it becomes even easier to invest in cryptocurrencies. Whether it will also make a positive contribution to the growth of this market remains to be seen. Futures contracts for Bitcoin are just claims on virtual coins, just as futures contracts for gold are just claims on the physical gold. There is a chance that more investors will now invest in derivative products, which may reduce the demand for Bitcoin itself.

For the time being, at least, the mood among investors is positive. They see Bitcoin not only as a speculative investment, but also as an alternative kind of money. A form of money that is scarce and where governments and central banks only very limited control. Whether it is also an alternative tender only time will tell.

This contribution comes from Geotrendlines 

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