As expected, bitcoin has resumed its upwards trend following a massive selloff.
The digital coin jumped 35% in the last five days after dropping more than 21% in the four days prior to that. The Bitcoin price now sits close to US$8,000, up 694.9% for the year.
As reported by Forbes:
‘Bitcoin reached its latest high after altcoin Bitcoin Cash suffered a sharp decline, dropping more than 25% in under 48 hours, CoinMarketCap data shows.
‘Most of Bitcoin’s recent gains seem to have been at the expense of Bitcoin Cash, asserted algorithmic programmer Jacob Eliosoff.
‘These two currencies have been competing for investor dollars as of late. After developers called off Bitcoin’s SegWit2x hard fork, which would have doubled the transaction capacity of the Bitcoin network, Bitcoin Cash surged more than 50%.
‘At the same time, the price of the more traditional Bitcoin fell more than 25%, declining from an all-time high of nearly $7,800 to almost $5,500, BPI figures show.
‘As these two digital currencies moved in opposite directions, Tim Enneking, managing director of Crypto Asset Management, asserted that the failed hard fork increased the appeal of Bitcoin Cash, which has 8MB blocks compared to Bitcoin’s 1MB blocks.’
Bitcoin price rise hasn’t phased investors, yet
Of course, speculative gains aren’t the ultimate purpose of bitcoin. The coin was created as a medium of exchange. But as the price continues to rise, few are willing to give up their coins just yet.
But it does beg the question: Could the coin go the way of the tulip? As The Australian Financial Review explains:
‘In November 1636, the value of tulip bulbs in the Netherlands started to rise rapidly. At its peak, a single bulb cost more than 10 times the annual wage of an average worker.
‘The speculation was fuelled further by the introduction of a futures market, allowing people to trade without any bulbs changing hands.
‘In February 1637, it came to a sudden end. The price collapsed, trading stopped, futures contracts were not honoured, and those who held bulbs lost quite a fortune.
‘Dial forward 400 years.
‘The value of Bitcoin reached $US7200 this week. This is a seven-fold increase over one year. There was a brief fall of $US2000 when it appeared that traders preferred a different “cryptocurrency” called Bitcoin Cash.’
It is hard to argue against the fact that cryptocurrencies are surrounded by speculative traders looking to make a quick buck. But unlike tulips, bitcoin and blockchain has deeper value. It’s an alternative to our current payments system, in which bankers fatten their pockets at your expense.
To find out more about the secret world of bitcoin, click here.
Junior Analyst, Money Morning