Bitcoin price rises above $30,000 for the first time since June 2022 | Bitcoin
A sharp rise in bitcoin prices has pushed the cryptocurrency above $30,000 (£24,118) for the first time since June 10 last year, just before crypto lending company Celsius froze withdrawals in the run-up to its collapse.
Even given this recovery, the token is still well below the all-time high of $68,000 in November 2021, and well below where it was before the failure of the Terra stablecoin caused the “crypto winter”.
Nevertheless, bitcoin’s recent steady increase in value has sparked discussions of another cryptocurrency boom – and reignited fears of widespread market manipulation.
The collapse of Silicon Valley Bank last month and the wider contagion it has unleashed across financial markets led some cryptocurrency fans to turn to bitcoin, the sector’s original and most valuable token, as a way to hedge against fears that the entire traditional “fiat” “economy would crumble.
That attitude was characterized by the American venture capitalist Balaji Srinivasan, who in March bet $1 million that the price of a single bitcoin would top $1 million by June this year. His claim was that the US dollar would soon experience hyperinflation, causing the dollar value of a bitcoin to rise.
Questions and answers
What is bitcoin?
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Bitcoin is a “cryptocurrency” – a decentralized tradable digital asset. Invented in 2008, you store bitcoins in a digital wallet, and transactions are stored in a public ledger known as the bitcoin blockchain, which prevents the digital currency from being duplicated.
Cryptocurrencies can be used to send transactions between two parties using private and public keys. These transfers can be made with minimal processing costs, allowing users to avoid the fees required by traditional financial institutions – as well as the supervision and regulation that entails. The lack of any central authority supervision is one of the attractions.
This means it has attracted a range of supporters, from libertarian monetarists who like the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it is difficult (but not impossible) to trace a bitcoin transaction back. to a natural person.
The exchange rate has been volatile, and some consider it a risky investment. In January 2021, the UK’s Financial Conduct Authority warned consumers that they should be prepared to lose all their money if they invest in schemes promising high returns from digital currencies such as bitcoin.
In practice, it has been far more important for the dark economy than for most legitimate uses. In November 2021, it hit an all-time high of more than $68,000 as a growing number of investors backed it as an alternative to other assets during the Covid crisis.
Bitcoin has been criticized for the huge energy reserves and associated carbon footprint of the system. New bitcoins are created by “mining” coins, which is done by using computers to perform complex calculations. The more bitcoins that have been “mined”, the longer it takes to mine new coin and the more electricity is used in the process.
“This is the moment the world is redomining bitcoin as digital gold, returning to a model much like the pre-20th century,” he tweeted, which explains the effort. “Everything will happen very quickly when people check what I say and see that the Federal Reserve has lied about how much money is in the banks. All dollar holders will be destroyed.”
Alex Adelman, CEO of bitcoin rewards app Lolli, said Monday’s rally “didn’t have a clear catalyst” but was “a bellwether for bitcoin’s recent bullish market conditions and strong investor confidence. Bitcoin’s ongoing strength suggests bitcoin is emerging from so-called ‘ cryptowinter’ into a new phase of strength and renewed interest from retail and institutional investors.”
But the rally, after bitcoin prices hovered at $28,000 for nearly a month before surging past $2,000 in a day, has also fueled concerns about market manipulation.
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Questions and answers
What is a stablecoin?
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A stablecoin, as the name suggests, is a type of cryptocurrency that is intended to have a stable value, such as USD 1 per token. How they achieve it varies: the biggest ones, like tether and USD Coin, are actually banks. They hold large reserves of cash, liquid assets and other investments, and simply use these reserves to maintain a stable price.
Others, known as “algorithmic stablecoins”, try to do the same, but without any reserves. They have been criticized for being effectively supported by Ponzi schemes, as they require a continuous supply of cash to ensure they do not collapse.
Stablecoins are an important part of the cryptocurrency ecosystem. They provide a safer place for investors to store capital without going through the hassle of withdrawing entirely, and allow assets to be denominated in conventional currency, rather than other extremely volatile tokens.
A 2022 report published by the US National Bureau of Economic Research found that “wash trading”, the practice of selling cryptocurrencies between related parties to influence the reported price, averaged “over 70% of the reported volume” on 29 unregulated exchanges.
In June 2022, the US Securities and Exchange Commission (SEC) denied permission to launch a bitcoin-linked exchange-traded fund, which would allow investors to buy exposure to the cryptocurrency on the public stock markets, after concluding that it was impossible to prevent fraud. and manipulation in the market from influencing the price.
In addition to wash trading, the SEC said the market can be affected by individuals with a “dominant position” in bitcoin who manipulate its pricing, through fraud and manipulation on trading platforms, and through manipulative activity involving stablecoins “including tether.”
