Bitcoin continues its volatility this week, still back below $40,000 but up 4 percent over the week and still making double-figure movements in a day. At one point, the price crashed almost 22 percent, including a fall of 18 percent in 24 hours. From a high of $41,941, a correction dragged Bitcoin down to $31,115, the biggest fall since last March. Etoro, a digital trading platform, closed all margin trading after seeing a sudden rise in new activity.
There has been a recovery— a rise of 20 percent. But experts think that factors including the strength of the dollar could limit its return.
So what’s going on? What’s fueled Bitcoin’s recent rise, and will it crash like 2017? Some experts have offered three reasons for Bitcoin’s new movements: FOMO; a demand for hedges against inflation; and increased legitimacy from institutional investors. As for whether it will crash again, experts predict corrections but nothing like the previous big crash. In fact, some experts are expecting stimulus packages from the incoming US administration to increase dollar inflation risk and push more demand towards Bitcoin. Pantera Capital even thinks that the price of Bitcoin will triple by August 2021 to reach $115,000.
In the meantime, altcoins and DeFi tokens are having their own moment, and Elon Musk is looking happy. The Tesla founder, who occasionally talks about cryptocurrencies, is now the richest man in the world.
Bitcoin’s volatility has led some people to question its use as a currency, rather than as an asset, but one New York bar owner still sees BTC as a coin. He’s selling his bars for 25 Bitcoins or 800 Ethereum tokens.
The US Office of the Comptroller of the Currency has given crypto firm Anchorage a charter to operate as a national trust institution. It can’t hold deposits like a bank but it can operate across the country. The government of the city of Shanghai has gone even further. Its Xuhui District and Science and Technology Committee have invested more than $5 million in blockchain start-up Conflux.
As always, where there’s treasure there are pirates. A group of darknet drug dealers are believed to have stashed their ill-gotten gains in Bitcoin. A federal judge has issued a warrant to seize 392 coins. And Steve Chen, a 63-year-old Californian, has received a 10-year sentence for an investment scam involving digital currencies. Chen sold a digital currency that he claimed was backed by amber and gemstones from South American mines. His company had no mines.
In better news, CoinMarketCap has teamed up with The Sandbox to offer tokens in return for testing their crypto-knowledge. Altogether, some $400,000 of $SAND tokens are up for grabs. And Animoca Brands and Binance Smart Chain have announced a partnership to tokenize gaming assets. The two organizations will also explore more ways to turn virtual assets into tokens.