The bitcoin bull run is back in full swing, bringing to an end the brief period of turbulence during which the cryptocurrency’s value declined sharply.
Bitcoin was trading at $12,970 (£10,400) as of midday UK time, approaching the highest value it has achieved so far in 2019, according to figures from CoinMarketCap.
The virtual coin broke through the $10,000 (£8,020) mark - a psychological threshold that, once surpassed, drove investors to up their stash of bitcoin - in June and prices continued upwards for several weeks, the ranking site reports.
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However, values began plummeting from a high of $13,770 (£11,040), a record for the year, at the end of June to a low of $9,810 (£7,820) a week later. While values have yet to return to the $13,000 mark, the steady price increase over the past week means it may not be long before bitcoin matches its 2019 high.
It’s a critical move, too. Cryptocurrency news site FXStreet said last week that the market was entering a “mostly bearish” period, as it would be difficult for bitcoin to gain traction after falling below the $10,000 mark.
Bitcoin’s strong performance over the past week has also had an impact on rival coins.
Ethereum, ranked second behind bitcoin, rose from a monthly low of $230 (£184) per coin to today’s value of $310 (£249), CoinMarketCap notes.
Behind ethereum in the charts sits the banking-focused coin Ripple, which has yet to recover from the severe market swings that occurred at the end of June. It’s currently valued at $0.39 (£0.31) per coin, down significantly from its 2019 high of $0.48 (£0.38).
What’s been the reaction from analysts?
Despite bitcoin being some way off its all-time high of $20,000 (£16,370), recorded in December 2017, the cryptocurrency has “more than quadrupled in value” since the start of the year, according to The Independent.
While many attribute the virtual coin’s gains to larger companies announcing their own cryptocurrencies, including J.P. Morgan and Facebook’s Libra coin, some analysts believe that bitcoin’s dwindling supply may be spurring investor interest, the news site notes.
Although bitcoin is a virtual asset, the nature of the blockchain – the encrypted technology that underpins cryptocurrencies – means there is a finite amount, 21 million to be precise, that can be mined, which in itself is a difficult and costly process that unlocks more bitcoins.
“We may see further steep rises for bitcoin as it is slowly nearing its maximum supply of 21 million [coins],” said Christel Quek, commercial head for digital currency firm BOLT.Global. “Currently, there are nearly 18 million in circulating supply.”
Meanwhile, Edward Moya, a market analyst from foreign exchange firm Oanda Corp, told Bloomberg that bitcoin “could be coiling for a big breakout as institutional interest for blockchain technology shows no signs of slowing down.
“The bubble-like gains this time are driven on solid institutional interest and while security is still a big risk, it appears Bitcoin has overcome many of its initial growing pains,” he said.
