The price of Bitcoin continues to surge as the cryptocurrency becomes popularized by social media and Tesla CEO: Elon Musk. Bitcoin soared above $60,000, just weeks after passing $50,000 and $40,000 in January. Bitcoin has grown by 963% over the past 12 months in total — some bitcoins in circulation are worth more than $1 trillion.
The surge in the value of Bitcoin is a direct result of Elon Musk and Tesla’s interest in the cryptocurrency. Many investors were excited about the continuing rise of Bitcoin’s value because of Musk’s announcement that his company owns more than $1.5 billion worth of Bitcoin.
Musk’s investment in Bitcoin has encouraged many investors to believe that the cryptocurrency will grow in popularity among other companies as a form of payment. Tesla already plans to allow consumers to purchase cars and SUVs with Bitcoin, and other companies are expected to follow suit to reap the benefits of trading in cryptocurrency.
In addition to Musk’s investments in Bitocin that have caused its value to increase, banks and financial firms are beginning to validate the currency. Square and PayPal both allow consumers to buy and sell Bitcoin, and Visa and Mastercard are both planning to allow consumers to use cryptocurrency with their credit cards. Further, BlackRock and Bank of New York Mellon both plan to embrace Bitcoin soon.
Many investors also see value in Bitcoin as a barrier against inflation and a weakening dollar. The cryptocurrency’s strongest supporters believe that Bitcoin will replace gold as the best defense against increased inflation. Additionally, the value of Bitcoin will continue to rise as stimulus money begins to circulate and aid the recovering American economy.
Conservative investors fear that President Joe Biden’s $1.9 trillion American Rescue Plan Act could overheat the economy and cause severe inflation that limits the value of the dollar. Holding Bitcoin investments will prevent investors from feeling the full effects of a declining dollar value.
Bitcoin also continues to see its value rise because it is more scarce than any precious metals or gems. There is a total cap of 21 million Bitcoins that creates artificial value — this is the same way that other cryptocurrencies like Dogecoin, litecoin, and stellar have increased their value. Currently, there are approximately 18.6 million bitcoins in circulation, which are created by computers and servers dedicated to solving complex math equations.
In addition to the increase in the value of Bitcoin, cryptocurrency mining companies are also expected to continue to grow as cryptocurrencies become a more standard form of currency. Bitcoin mining companies like RIOT Blockchain, Marathon Patent Group, and Hive, in particular, are expected to increase greatly in value.
Optimism about the value of Bitcoin continues as more companies continue to see the value in cryptocurrencies. Fans of Bitcoin believe that its rapid growth is different from previous surges because of interest from big-time investors and companies. Only time will tell if Bitcoin will continue to increase in value or if it will collapse like in previous cycles.