Bitcoin has seen its price pass US$1,000 for the first time in three years to kick start 2017 after the so-called cryptocurrency wrapped up last year as the best-performing currency.

Bitcoin breached the notable round number of US$1,000 late Sunday, a level not seen since November 2013, and continued to rise in the following days. But the virtual currency’s price is still shy of its all-time high of US$1,163 reached on the Bitstamp exchange in late 2013.

Bitcoin outperformed all central-bank-issued currencies with a more than 120 percent rise in 2016, helped by a notable boost following Donald Trump’s victory in the U.S. presidential election in November.

Market analysts believe that the rise of bitcoin was driven by a number of factors including geopolitical instability and an increase in the number of professional investors chasing quick profits amid strong market sentiment.

Although the virtual currency breached the key psychological level of US$1,000, no one has the crystal ball to predict where the highly volatile currency will go next.

Surpassing this price point could provoke a large number of sell orders, but it might also provide bitcoin prices with a new support level, said CoinDesk, a bitcoin news website.

Bitcoin was created in 2009, which can be exchanged with traditional currencies such as the U.S. dollar or used to purchase goods or services.

But the U.S. Securities and Exchange Commission has cautioned that bitcoin operates without central authority or banks and is not backed by any government, and its exchange rate has been very volatile.

The financial regulator also highlighted the security concerns, as bitcoin may be stolen by hackers and bitcoin exchanges may permanently shut down due to fraud, technical glitches or hackers.

According to Reuters, a tenfold increase in its value in two months in late 2013 took bitcoin to above US$1,100, but a hacking on the Tokyo-based Mt. Gox, once the world’s largest bitcoin exchange, in February 2014 caused its value plunge to some US$400 in the following weeks.

Bitcoin’s biggest daily moves in 2016 were around 10 percent, still very volatile compared with legal tenders, but still markedly lower than its trading in 2013 with daily price swings as much as 40 percent, Reuters noted.

Source: Xinhua/NewsGhana.com.gh

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.