The world's largest and most famous cryptocurrency, Bitcoin, has surpassed a value of $50.000, just two months after crossing $20.000 for the first time. The digital currency, known for its extreme volatility, only briefly held the historical price, before falling back to around €49,000. The arrival at the current valuation is the product of a bull run (or growth period) that began in late November, when the cryptocurrency was only valued at €16,500.
Since Bitcoin entered the public consciousness, a debate has raged over whether its sharp price increases constitute market bubbles (when the value of an asset is grossly overinflated) or whether they are truly representative of the role that cryptocurrencies could play in the ecosystem. financial of the future Long-time Bitcoin holders (also known as HODLers) have had to deal with a series of ups and downs. Most famously, after reaching highs of €19,783.21 in December 2017,
Bitcoin fell below €8,000 in just two months. Investors who made it to the top saw 60% of the value of their investment disappear, which some saw as the bursting of the Bitcoin bubble. However, Bitcoin's most ardent supporters have long argued that the currency will reach new highs well beyond the 2017 high. And now, institutional investors are beginning to gain confidence in cryptocurrencies as well. In recent months, insurance giant MassMutual has bought for €100 million, while tech company MicroStrategy has converted most of its balance sheet (around €500 million at the time of the initial purchase) to Bitcoin. Earlier this month, news broke that electric car company Tesla, run by cryptocurrency promoter Elon Musk, had also invested €1.5 billion in the coin. The announcement saw Bitcoin breach the €40,000 mark for the first time. However, while Bitcoin can still reach much higher valuations, investors looking to catch this latest wave should exercise some caution. Just like in 2017, a significant market correction could soon take place, which could spell disaster for any investor unable to absorb losses.