Bitcoin: The future of money?

SINGAPORE (CNA) – Bitcoin has continued its upward trajectory, rising to another record high last week.

The cryptocurrency, which was launched in 2009, has seen some volatile moves. It made headlines in 2017 when it soared 20-fold from the beginning of the year to almost USUSD20,000 by December.

But the euphoria fizzled out, and Bitcoin sank below USUSD5,000 by October 2018.

The years 2018 and 2019 were bear markets for the cryptocurrency.

It recovered all its losses by December 2020, and has been on a roar since then, hitting new highs every month in February, March and April.

Market watchers such as Jeffery Halley have said this is a sign of “undeniable speculative momentum” towards Bitcoin.

“Whether you believe in crypts or not, you have to respect the momentum of the trade,” said Halley, senior market analyst at Oanda.

“I’m not prepared to say that this is the top of Bitcoin. It could well trade to USD100,000 on speculative mania over the next couple of months.”

Fears of currency debasement are driving investors into cryptocurrencies.

Chief Investment Officer at Standard Chartered Wealth Management Steve Brice said the printing of money by central banks is a contributing factor.

“Central banks around the world are generally printing a lot of money trying to create inflation, trying to inflate debt away … People are worried about whether the dollar or the euro or sterling will be a good store of value going forward,” he said.

A store of value is something that does not change in value, or whose value goes slightly higher, when inflation is taken into account.

Traditional asset classes include alternative currencies and gold.