The price of Bitcoin hit an all-time high over the weekend, hitting $ 61,500 (£ 44,150) on Saturday night.
This was the first time the cryptocurrency has broken the $ 60,000 (£ 43,070) mark, although it fell back to around $ 56,000 (£ 40,200) on Monday morning.
Despite the decline, Bitcoin is still having an extremely strong start to 2021.
It opened the year to around $ 29,000 (£ 20,865) and quickly passed $ 40,000 (£ 28,780), before falling back to $ 30,000 (£ 21,585) at the end of January.
It peaked at $ 58,000 (£ 41,730) on February 21, before falling back to $ 45,000 (£ 32,377) at the end of the month.
But March saw a strong rally, with Saturday’s record pushing both Bitcoin and online trading platform Coinbase into a global trend on Twitter.
Why is the price of Bitcoin increasing?
Bitcoin’s value has been supported by a combination of factors, including Wall Street banks announcing their intention to own the cryptocurrency and large companies like Tesla investing in the coin.
In early February, electric car maker Elon Musk announced that it had bought $ 1.5 billion worth of Bitcoin, which skyrocketed its value.
A few days later New York-based banking firm BNY Mellon announced plans to hold Bitcoin and other cryptocurrencies for its clients.
The value of Bitcoin was further bolstered by the keen interest of daily traders. Interest in cryptocurrencies exploded following GameStop’s monumental surge in January, which saw members of the r / WallStreetBets subreddit push the video game retailer’s share price up to nearly $ 350. , forcing investment firms to close short positions at a cost of billions.
What could happen next?
Cryptocurrencies are very volatile, which means that their value can fall as easily as it can rise. This makes it a risky investment.
Billionaire venture capitalist Tim Draper predicted its value could potentially increase “100-fold.”
“It’s not like this is going to completely replace the dollar, although I think people are going to laugh when you try to buy things for dollars in the future,” he said on the podcast Unstoppable.
However, there are many outside factors that could potentially cause Bitcoin’s value to drop, including government intervention.
India is on the verge of proposing a law banning cryptocurrencies, which would sanction anyone who trades or even owns such digital assets, Reuters reported Sunday.