The price of Bitcoin has reached a new record high of almost $50,000 on Sunday, which according to CNBC is as result of an endorsement and support for digital currencies by humongous companies on the list of Fortune 500 companies.
The world’s largest cryptocurrency by market value – bitcoin surged more than 5% to an all-time high of $49,716 Sunday afternoon, according to data from industry website CoinDesk.
The digital asset reversed course Monday, sinking 2.4% in the last 24 hours to a price of around $47,925. The Valentine’s Day surge was thought to have been driven by news of large firms like Tesla, Mastercard and BNY Mellon warming to cryptocurrencies.
In July 2019, PayPal Holdings announced its decision to allow customers to use cryptocurrencies, and this caused a hysteria in the market with numerous investors trooping and buzzing to buy bitcoin. The high demand resulted in a sharp surge in the price of Bitcoin of about 4.9%. The decision by PayPal was staunchly lauded by Mike Novogratz, CEO of Galaxy Investment Partners, who tweeted that it is “the biggest news of the year in crypto,” adding that banks will embark on a race to service digital currencies. “We have crossed the rubicon,” he said
Tesla also invested $1.5 billion in Bitcoin and has announced its intention to accept Bitcoin for payment last week. According to the head of Tesla – Mr. Elon Musk, investing in digital currency and other alternative reserve assets was strategic and believes that they will grow.
Additionally, Mastercard another large firm on Thursday said that it would support certain cryptocurrencies later this year, while BNY Mellon announced the following day it would open up its custody services to digital assets.
The major issue of concern is that, all the aforementioned industry giants have bitcoin in their portfolios, and one may wonder if these companies genuinely want to accept bitcoin for transactions or they want to deliberately stir up market demand for bitcoin by announcing their intentions concerning bitcoin; knowing very well how sensitive the capital market is.
A sensitive market that can become highly volatile at good news or bad news, and they are highly susceptible to wild fluctuations in price. There are numerous instances where big companies use sensitive markets to price out the news or gradually leak good or bad news so its stock price rises or falls smoothly and consistently in order to enhance their portfolio.
Furthermore, actions and decisions taken by large firms induce investor confidence to follow suit. Could these large firms be setting another precedent to cash out from the market? Are their decisions credibly based on the usefulness of bitcoin as a store of value and also as a medium of exchange? These are questions that the Securities and Exchange Commission should pay critical attention to in order to avert any market crush.
Bitcoin’s price more than quadrupled in 2020 and is up more than 60% since the start of this year. Bulls say it’s down to heightened demand from institutional investors and perception of the digital coin as a store of value similar to gold. But bears worry bitcoin may be one of the biggest market bubbles in history.
Read also: Tesla on the Verge of Accepting Bitcoin for Payment after Investing 1.5 Billion in Bitcoin,
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