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Understanding Bitcoin’s Recent Surge



Bitcoin’s Run is Different This Time

On Sunday Bitcoin hit an all-time high of $34,000 per coin, continuing a surge that has been happening since early November. Then early yesterday morning, Bitcoin prices fell to as low as $29,316 before regaining ground later in the day.

Bitcoin more than tripled in value between October 3, when each coin was valued at $10,500, and Sunday’s peak. Some are comparing the recent run on Bitcoin to the cryptocurrency’s December 2017 peak and crash. The past several months have been the most active for Bitcoin since then.

However, some analysts say this surge for Bitcoin is different from the last one. This time institutional investors like JPMorgan (JPM), Guggenheim, and MassMutual have poured hundreds of millions of dollars into Bitcoin. These investors have said Bitcoin’s price could eventually reach $400,000 per coin.

Hedging Against Inflation

Some investors see Bitcoin as a way to protect themselves against inflation. Governments around the world are currently working to stimulate their countries’ economies, which have been battered by the pandemic.

Some investors are concerned about inflation that will result from these stimulus measures. Bitcoin is not valued against international currencies—rather, its value is based on a finite supply of mined “coins.” This means that the cryptocurrency will not lose value as a result of government stimulus measures. In fact, its value could rise as more investors invest in the cryptocurrency to hedge against inflation.

Volatility Ahead

Though more established investors are taking an interest in Bitcoin, analysts predict that the cryptocurrency is still likely to be volatile for some time. Though Bitcoin’s situation is different than it was during its 2017 rise and fall, the cryptocurrency is far from being settled.

It is worth noting that most large institutions are holding their cryptocurrency allocation around 1% or less of total assets under management. If major changes in Bitcoin prices occur, these institutions will be able to weather the volatility. However, for smaller firms and individual investors, that wave may not be as easy to ride.

Bitcoin, Ethereum, and Litecoin are all tradable today through SoFi Invest®. Make your first crypto trade of $10 or more and get $25 in Bitcoin.*

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Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
* Terms and conditions apply. To receive the offer, you must: open a new SoFi Digital Assets LLC account through the signup link you were given, and buy at least $10 worth of any cryptocurrency within 7 DAYS. The offer only applies to new crypto accounts. The offer is limited to one per person. The offer expires on December 31st, 2021. Once conditions are met and account is opened, you will receive $25 in Bitcoin (BTC) within 7 days. Bonus amounts of $600 or greater in a single calendar year may be reported to the Internal Revenue Service (IRS) as miscellaneous income to the recipient on Form 1099-MISC in the year received by applicable law. Recipient is responsible for any applicable federal, state or local taxes associated with receiving the bonus offer, consult your tax advisor to determine applicable tax consequences. SoFi reserves the right to change or terminate the offer at any time without notice.
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