Bitcoin Prices Driven Higher by Private Companies and Central Banks
A Brief History of Bitcoin
Bitcoin prices have climbed by about 25% in October and by over 80% this year. The price of the cryptocurrency has not been this high in almost three years. Both central banks and private companies have shown interest in digital currencies recently, which has contributed to the bitcoin price surge. On Tuesday, Bitcoin climbed by about 4% to reach $13,690.
Bitcoin, the largest digital token by market value, was created in 2009. The currency traded for almost nothing at first. Bitcoin then hit an all-time high in late-2017, trading for $20,000 per coin. Shortly after hitting this peak, Bitcoin prices tumbled to $7,000 in April 2018 and then below $3,500 in November 2018. Now, the price of the cryptocurrency is on the rise again.
Interest in Cryptocurrency from Private Companies
Last week, PayPal (PYPL) announced plans to allow users to store, buy, and sell various cryptocurrencies on the platform and on mobile payment app Venmo, which is owned by PayPal. PayPal shares climbed 5.5% on the news.
Square (SQ), a PayPal competitor founded by Jack Dorsey, has been accepting some transfers of Bitcoin for the past three years. Bitcoin-related transactions have recently become much more popular on the platform. Square has seen a 600% surge in Bitcoin related revenue during the pandemic.
Fidelity Investments also created its first Bitcoin fund, which will be available to family offices, registered investment advisers, and other institutions. The minimum investment will be $100,000. Large, established companies like PayPal, Square, and Fidelity becoming involved with Bitcoin are giving the cryptocurrency more legitimacy.
Central Banks Discuss the Future of Cryptocurrency
A number of central banks around the world have also expressed interest in creating digital currencies. The European Central Bank announced that it will begin exploring the possibilities for a digital euro.
Jerome Powell, Chairman of the Federal Reserve, discussed the potential benefits of a digital US dollar while speaking at an IMF event recently. The People’s Bank of China is already testing a digital version of the yuan.
Bitcoin has had a volatile trading history and its price will likely continue to see ups and downs, but recent developments in both the private and public sector have some investors buzzing about what lies ahead for the cryptocurrency.
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