Bitcoin Soars to a Three-Year High as Investors Flock the Market

Bitcoin, the most popular cryptocurrency, is currently worth more than $17,000 (£12,800) which is a three-year high. Although Bitcoin’s price has swung widely over the years, investors are showing a strong preference for BTC and other cryptocurrencies. This is thought to be occasioned by the volatility being experienced in the global stock market due to the pandemic. However, experts are warning investors not to treat Bitcoin and other cryptos as safe havens.

Increase in Value

On Wednesday, Bitcoin soared to $17,891, a 7% jump with this price being the highest since December 2017. Some analysts think the coronavirus pandemic has forced investors to take a second look at the long-term viability of Bitcoin as well as other cryptocurrencies.

Even with the positive outlook, investors are still worried about fraudulent trading following several high-profile hacks.

Confidence and Volatility

When the markets are experiencing volatility, savvy investors move their money from shares and into investments that are considered safe like gold and cash. In the current market, investors are starting to consider cryptocurrencies a viable shelter from the stock market’s volatility.

Edward Moya, from the trading firm Oanda, says that the reason people are moving into Bitcoin is that this pandemic has disrupted safe-haven trades and gold is not performing at the moment. Both of these have made investors diversify into cryptocurrencies.

Bitcoin’s Attraction

Bitcoin’s attraction stems from the fact that its supply is limited as it is capped at 21 million. Many think Bitcoin’s scarcity gives it its value and protects Bitcoin from inflation, something a lot of people are worried about right now.

But, the head of investment strategy and chief economist at AMP Capital, Shane Oliver, is warning people against investing in Bitcoin. He says that its volatility works against it in terms of its ability to retain value. He says he trusts physical cash to keep its value in the long term better than Bitcoin.

Crypto is Going Mainstream

In October, PayPal announced that it would make it possible for its customers to trade cryptocurrency through their PayPal accounts. This will allow PayPal customers to buy items using cryptocurrency from the 26 million merchants who accept PayPal.

PayPal intends to allow buying options through its cryptocurrency wallet in the next month or so in the United States. PayPal says it will do a full rollout next year.  If you do not want to wait that long, are outside the United States, or do not want to deal with any of the issues that might come up as PayPal rolls out its option, you can always get a cryptocurrency wallet from a reputable trader and use that instead.

Expect Massive Swings

Mr. Moya is warning traders to brace for more volatility. As he explains, hedge funds and high-frequency traders are the ones driving the price of Bitcoin higher. Both of these groups will continue to trade erratically as the value of Bitcoin nears $20,000 so traders should expect price swings of $1000 or more every few minutes.

The fear of missing out is also driving the price upwards because as more of these people purchase Bitcoin, they increase its demand which leads to its price climbing.

For more information please visit the Paxful website