Bitcoin price tops $52,000 as debate rages over Bitcoin’s merits

Posted: 18 February 2021 5:49 am
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Federal Reserve chair skirts questions on Bitcoin as safe haven vs the dollar.

  • Bitcoin hits another all-time high of $52,232.
  • St. Louis Head of the Federal Reserve contrasts Bitcoin to the US dollar.
  • Charts show Bitcoin volatility decreasing over time.

Bitcoin is trading around $52,000 at the time of writing, up about 6% in the last day.

Its rise comes amid reports that Coinbase was the exchange of choice for Tesla Inc’s $1.5 billion Bitcoin acquisition. According to The Block, anonymous sources say the billion dollar purchase was made over multiple trades using Coinbase’s network of over-the-counter trading desks.

There are few exchanges within the US who are better placed to facilitate such a transaction. According to the report the trades were conducted in the “first days of February”. Facts concerning Tesla’s purchase of Bitcoin are likely to bring further bureaucratic scrutiny.

US 10-year Treasury Bond yields have risen further on US retail sales data, beating market estimates with the price of oil following sustained production cuts from OPEC+. Bitcoin’s market cap is at $970 billion pulling the market for altcoins upwards with it.

Most leading altcoins are in the green with Litecoin up over 10% and Ethereum building on recent gains also up 7%. Monero, the privacy focussed coin, has jumped 13% which stands out because it has not shared the most recent price gains over the last few months.

Bitcoin volatility down from previous bull run of 2017

The image below shows that Bitcoin price volatility against the US dollar is trending downwards nearly halving in volatility from the Bitcoin Bullrun of 2017.

The Head of the St. Louis branch of the US Federal Reserve, James Bullard was drawn to comment on Bitcoin while appearing on CNBC.

Asked about whether Bitcoin could challenge the US dollar in global payments, Bullard said that he sees a global system of US dollar payments “as far as the eye can see”. However, the St. Louis Fed chair skirted around whether Bitcoin could be a safe haven in the event of “currency debasement”.

Harley Bassman, managing partner at Simplify Asset Management is quoted by Reuters as saying that Bitcoin volatility makes the currency too unstable for widespread use. Bassam claimed that Bitcoin price volatility is at “80%” making it unsafe as a “store of value”.

Going against that, other reports show that Bitcoin’s volatility has decreased since the 2017 Bitcoin bull run. According to a Woobull chart, when paired against the US dollar, Bitcoin volatility decreases by nearly half at its peak in February 2018 to the highest volatility in January of this year.

Interested in cryptocurrency? Learn more about the basics with our beginner’s guide to Bitcoin, dive deeper by learning about Ethereum and see what blockchain can do with our simple guide to DeFi.

Disclosure: The author owns a range of cryptocurrencies at the time of writing

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Picture: Getty

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