One of the biggest stories of 2020 in the world of finance and technology was the rise in the price of Bitcoin. The biggest and most famous crypto token, which was at around $8,000 in January 2020, rose by nearly five times by the time 2021 came around. Bitcoin started 2021 by breaching $30,000 for the first time ever, which in itself was a sharp rise in a short span of time – Bitcoin was trading at around $20,000 as recently as 15th December. This rally continued into January, as the token went to $34,000 by 3rd January, before correcting and falling closer to $30,000 as the month progressed, before then shooting up again to reach nearly $42,000. Now, as we move into February, the token has gone to yet another all-time high, crossing $44,000 after the car company Tesla announced that it had bought $1.5 billion of Bitcoin, and that it would soon begin accepting Bitcoin as a form of payment.
Tesla is of course helmed by Elon Musk, who became the richest person in the world during 2020 due to a sharp rise in the price of the company. He is the CEO of SpaceX as well, which has been one of the most groundbreaking firms in the area of space transport and travel, while Musk has also recently been in the news for being a big backer of Bitcoin and cryptocurrencies in general. A tweet by Musk earlier this year helped Bitcoin to surge by nearly 15% in the space of 24 hours, and now the news that his company has invested such a huge amount into Bitcoin is further proof that Bitcoin is beginning to see mainstream acceptance.
This is expected to be the first in a wave of investment and buying of Bitcoin. Antoni Trenchev, co-founder and managing partner of Nexo, one of the leading firms for digital assets and custody services in the world, has said that he believes that around 10% of all firms in the S&P 500 Index will have some form of investment in Bitcoin by the end of 2022. Tesla is the highest-profile organization to publicly announce its Bitcoin purchase, but it is certainly not the first. MicroStrategy Inc. has invested $1.1 billion in Bitcoin, while in October 2020, Square, which is a payments platform that is led by Twitter CEO Jack Dorsey, announced that it had converted around $50 million of its assets into Bitcoin. Many observers believe that this will be the prevailing trend across Wall Street and Silicon Valley in the coming months.
One of the biggest concerns around Bitcoin has been its volatility. It has been characterized, so far, by large swings in its price, and famously saw a huge crash in 2018 following a similar price rally in 2017. Thus, some people believe that this is a bubble and is set to burst in the near future, and are therefore staying away from Bitcoin and the crypto space. Others, however, see the investment by companies and long-term investors, and public backing by influential figures such as Musk and Dorsey, as proof that the price of Bitcoin should be a lot more stable now, as there is a lot more buying interest as a result. However, this has not stopped wild predictions for where the price of Bitcoin will end up in the short to medium-term – these range from the price going to $400,000, to the token crashing and burning and being worthless. It is likely that neither of these outcomes will come to pass, but Bitcoin is well on its way to hitting $100,000 in the next few months, which will still be a huge return for early investors, and even those who entered the space early last year.