Bitcoin soars above $68,000 for first time ever

The bitcoin price has reached a new record high, breaking through $68,000 (£50,000), and analysts predict that the world’s best-known cryptocurrency will rise further in the coming weeks.

Bitcoin is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.

This beats the previous record high set in late October, when bitcoin reached nearly $67,700 before falling back again when investors discovered a new cryptocurrency, shiba inu. Other cryptocurrencies have also risen to record highs, such as ethereum, which soared to $4,837.

Bitcoin has always been volatile but remains the world’s largest digital currency, with a market value of more than $1.1tn. Five years ago, a single bitcoin was worth about $700. Investors are buying it because they are worried about rising inflation – as an alternative to gold, a traditional inflation hedge – and as bond yields are falling.

Meanwhile, Naeem Aslam of Avatrade said that increased institutional take-up of cryptocurrencies is also driving bitcoin and ether higher.

“The recent cryptocurrency rally has been aided by the launch of a bitcoin-linked ETF in the United States as well as Elon Musk’s weekend Twitter poll.

“Solana and binance coin have gained nearly 20% in the last week, bringing the total market capitalization of cryptocurrencies to $3 trillion.

He added: “As evidenced by bitcoin’s price action, which is now four times what it was at the end of 2020, investors are becoming more comfortable with the practical use of bitcoin and companies are working hard to find innovative ways to use blockchain technology, as seen by the launch of new coins such as Solana.”

Last night, the US Federal Reserve raised concerns over the rise of stablecoins; cryptocurrencies that try to peg their market value to some external reference, such as the US dollar.

In its financial stability report, it said that some stablecoins were vulnerable and that policymakers are concerned about the consequences if a stablecoin can’t hold its value.

“The value of stablecoins outstanding has grown about fivefold over the past 12 months and stood at around $130bn as of October 2021,” the report said.

“Certain stablecoins, including the largest ones, promise to be redeemable at any time at a stable value in US dollars but are, in part, backed by assets that may lose value or become illiquid. If the assets backing a stablecoin fall in value, the issuer may not be able to meet redemptions at the promised stable value.”