The digital currency bitcoin has for the first time exceeded the level of $5,000, signaling a successful overcoming of the turbulence surrounding its future and stable demand following the creation of bitcoin cash.
According to the CoinDesk price index, bitcoin was trading at a record $5,103.9 on Saturday morning, reports the BBC.
This brings the total value of cryptocurrencies traded on official markets, including ethereum, bitcoin, and the bitcoin cash derivative, to over $176 billion.
‘Among traditional investors, there is a growing sentiment that it is good to have a small amount of cryptocurrencies in a diversified portfolio as an acceptable form of risk enhancement.’
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Meanwhile, traders began selling, and by Monday afternoon, the value of bitcoin had fallen 12 percent from Saturday’s record level to $4,485.
At the beginning of the year, the value of bitcoin was less than $1,000, and as recently as July, some market observers feared it would slide even lower due to a ‘civil war’ over its future.
Compromise Plan
The opposite occurred – its value increased after most engineers and ‘miners’, the people who approve transactions by adding their own computing power, began implementing a compromise plan, allowing for the processing of more transactions per minute.
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Then, in August, a new virtual currency, bitcoin cash, was created based on the bitcoin transfer ledger (blockchain), and this occurred without any problems for the original digital currency.
Both events attracted media attention, which is considered one of the reasons for bitcoin’s strengthening.
Despite its slide below $4,500, cryptocurrency expert Eitan Jankelewitz from the London law firm Sheridans predicts that the strengthening trend will continue in the medium term.
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“We have already witnessed such declines when a certain level was reached – often because people were placing orders with traders to withdraw from the currency when it reached a certain value.”
“It is human nature to choose a round number (like $5,000),” claims Jankelewitz.
“Among traditional investors, there is a growing sentiment that it is good to have a small amount of cryptocurrencies in a diversified portfolio as an acceptable form of risk enhancement,” he explains.
“Additionally, more companies today allow the purchase of the desired amount of bitcoin, without the need to necessarily understand how the technology works or how to ensure security,” emphasizes Jankelewitz.
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