Recently, Bitcoin surpassed its all-time high, which was $68,990.90, reaching $69,191.94 Tuesday afternoon. Then, as expected, the price fell, and at the time of writing this article, its price is $62,251.75, which will surely change by the time this article is finished. Yes, volatility in the world of cryptocurrency is, for now, the price of doing business.
The drop in the price of Bitcoin could be considered extreme if it were any other asset, but in this world it is not. In fact, it is common, and surely this is due to investors seeking profits.
Why did the price of Bitcoin skyrocket?
Despite the usual volatility in the world of cryptocurrencies, it is necessary to understand why the price has managed to surpass its all-time high and why it has skyrocketed in such a short period of time.
According to The Wall Street Journal, "Bitcoin exchange-traded funds have been a smash hit, helping feed into a frenzy that has sent the cryptocurrency’s price to a record high."
In statements made to Voz Media, Marcelo Fleischer, cryptocurrency expert and founder of the first Bitcoin-sharing site in Spanish in the world, explained that exchange-traded funds (ETFs) allow people to access the increase in price without the need to buy the cryptocurrency directly.
According to The Wall Street Journal, the predictions failed. and the price of Bitcoin exceeded all expectations. "Some analysts predicted the funds’ big initial splash would be followed by a slowdown, but instead the pace of flows has accelerated in recent weeks as bitcoin prices approached record levels," WSJ noted.
"Many analysts attributed bitcoin’s advance in the second half of last year to anticipation that the ETFs would be approved. Now, they say investors’ embrace of the funds is driving more bullishness, in addition to creating new demand," the report added.
Bitcoin: Cryptocurrency or speculative asset?
However, despite Bitcoin's meteoric rise, Marcelo Fleischer warned in a recent conversation with Voz Media that Bitcoin is being used as a speculative asset and not for its original purpose, as "an alternative currency ... a monetary system that competed ... with the one we know." He further explained that according to the original idea, Bitcoin does not have a central issuer, it has a predetermined and decreasing emission, and payments are made person to person, ergo without intermediaries.
The criticisms made by Fleischer are directed at the Bitcoin BTC ecosystem, the cryptocurrency originally created by the anonymous Satoshi Nakamoto, but then, due to internal discussions related mainly to scalability, Bitcoin forked and other coins were born, Bitcoin Cash (BCH) being the best-known and the one that is in favor of scalability.
Despite everything, the expert is optimistic, and stated that Bitcoin will begin to be used for as its creators intended when people need to use it.
Furthermore, Fleischer assured, "Price is not necessarily, at a certain moment, associated with value." He warned that because "Bitcoin (BTC) stopped many years ago reflecting the original intention of its creator," he believes that eventually "the price will reflect it."
