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The digital currency bitcoin has been swinging in the range from extreme lows of $4000 to close to $20,000, and many analysts are unable to predict the recent move.
Some investors believe the price may further increase but the decline in price six months ago to $3200, made the new hike appear extraordinary and untrustworthy.
The rate gained significantly and suddenly, even as, the popularity of the coins declined - visible in the Google searches which declined to a fraction of what it was in 2017.
Currently, the currency has maintained momentum, even though, it has been pushed into the $10,000 area where it is facing strong selling pressure. Despite resistance at $11,000, the cryptobull can propel it higher.
Some analysts expect the price to close into the upper $30,000 levels. The analysts state the risk of war in the Middle East is one of the biggest drivers for the digital money that has restored its reputation as a haven for storing wealth where several investors are parking their earnings.
Other positive news supporting it includes the Facebook plan to launch the digital currency in the coming year. The coins grew $2000 in a week since the US firm proposed to introduce a currency called Libra in the coming year.
This is a move that can reshape the monetary system and may have a long-term impact on some authorized institutions.
Investors in the sector are worried over the higher volatility, where the meteoric rise to $20,000 in 2017 and then collapse to below $4000 – makes it unreliable and a highly risky option.
There are fears of re-inflation of the bubble in the sector when the money gained above $11,000. Some believe the Facebook announcement may have been the key driver for the gain.
However, there are other geopolitical aspects of the new changes where the gold price increased to one of the highest since 2013 – which means, the investors are trying to find alternatives to park their money.
The slowdown in the US economy and the Fed rate cut expectations, while, the rate declined in the Eurozone led to contractions of low-risk options.
It is assumed the demand from professional investors and hedge fund managers may have increased the rate of the derivatives and hence, the coin was at an all-time high at the Chicago Mercantile Exchange in the last week.
Some regulators feel the entry of firms like Facebook into the digital coin market may create a need for higher regulatory aspects and there will be a need for tougher control to protect the investors.
The governor of the Bank of England said the entry of a new monetary unit into the system will be supported but the firms need to meet the highest regulatory standards to ensure smooth functioning in the markets.
There have been huge oppositions to such investments where the governments and central banks are warning that such monetary units are destabilize banking, even though, the next generation payment systems may include some of these opportunities.
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