Cryptocurrency Bitcoin has reached a new high of over $38,361 (£28,287).
The digital currency has fluctuated in value over the years since launching in 2010, but it was climbing fairly steadily in the latter part of 2020.
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Here’s what we know about Bitcoin prices and what the experts have said about why the price changes could be happening.
What is the price of Bitcoin now?
The price of Bitcoin currently stands at around $38,361 (£28,287) according to Coindesk.
This is a “24 hour per cent change” of +11.15 per cent, according to the website.
Bitcoin’s performance has been strong in recent months, but this could change at any point as the currency is famously volatile.
Bitcoin makes up a large part of this, but other cryptocurrencies included in this total include Ether.
Why has it gone up so much?
Analysts from investment bank JP Morgan have suggested Bitcoin could become a rival to gold, Reuters reports.
The bank said this week Bitcoin could one day trade as high as $146,000 (£107,684.49) – this could be the case if investors choose it as a perceived safe-haven asset.
“Bitcoin’s competition with gold has already started in our mind,” the bank said, referencing more than $3bn of inflows into the Grayscale Bitcoin Trust and $7bn outflows from gold, according to Reuters.
“Considering how big the financial investment into gold is, a crowding out of gold as an ‘alternative’ currency implies big upside for bitcoin over the long term,” it added.
More millennials joining the investment market could also play a role as it is likely they will prefer to trade in digital assets, JPM suggested, but it also pointed out the volatility of Bitcoin.
Meanwhile, there have been some recent developments that may impact Bitcoin such as PayPal announcing it will allow customers to store and spend Bitcoin within its service from early 2021.
Blomberg reports that supporters of Bitcoin suggest the cryprtocurrency provides a hedge against dollar weakness as well as of the risk of faster inflation.
“The more that people perceive that their assets, particularly their liquid assets such as fiat currencies are eroding in value, the more they will look for alternatives,” said Geoffrey Morphy, president of Canadian crypto mining company Bitfarms Ltd, according to Bloomberg.
Some analysts think Bitcoin’s value could rise even further if the value of the US dollar weakens.
While the value of the US currency rose in March at the start of the coronavirus pandemic as investors sought safety amid the uncertainty, it has since dropped due to major stimulus from the US Federal Reserve.
How has it changed over time and what could happen next?
The volatility of Bitcoin means it is not easy to predict what will happen to the currency in future.
When the cryptocurrency launched in 2010 it had a value of less than 10 cents.
Bitcoin had a previous boom in December 2017 when it climbed to nearly $20,000, having started the year at less than $100, but the high prices did not last and eventually dropped once more.
After several more years of fluctuating prices, Bitcoin prices were climbing in the latter months of 2020, rising from around $10,000 in September reaching figures around $20,000 by December, according to data on Coindesk.
But it is not known if prices will rise or fall in future and investment always comes with risk.
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