Cryptocurrency History – Bitcoin Breaks $21K

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Cryptocurrency investment continues to rise as Bitcoin breaks the $21,000 barrier to reach the highest price valuation in crypto history.

What’s going on?

On Wednesday 18th December, Bitcoin (BTC) made crypto history after breaking the $20,000 (£15,500) barrier for the first time. This new breakthrough surpasses the previous record set during the 2017 boom and BTC investors couldn’t be any happier.

Since the announcement, the cryptocurrency trades at $21,200 (£16,200) after valuation saw a further 15% increase within 48 hours of the event.

Coming as a surprise to few, the digital currency amassed a 170% increase in valuation within a year despite stock market turmoil. Industry analysts speculate that this upsurge will soon pass the $22,000 mark.

Impact on the cryptocurrency market

The rise in value can be attributed to an increased demand by retail and corporate investors who view the cryptocurrency as a potential avenue for profit.

Plans by Microsoft and Starbucks to accept bitcoin as a payment method in the coming years is expected to boost value further.

Adoption of digital currency as a viable form of payment continues to grow as recognised organisations including PayPal show their support.

Industry experts believe that a shift in cryptocurrency acceptance and accessibility is likely to take place in the coming decade following this monumental breakthrough.

The historic announcement comes as a massive boost for the cryptocurrency market as BTC’s success places the industry centre stage. This surge in publicity serves to not only improve BTC’s value over the week, but also increase the value of other cryptocurrencies.

Ethereum, a smaller digital currency often referred to as an alt coin, saw a 12% increase in value following the event. Ripple’s XRP reported a 30% increase in value over the last 30-day period, its highest upsurge this year.

Advancements by BTC have enrichened the cryptocurrency market, allowing smaller altcoins to make triple-digit advances during a chaotic financial year.

Industry caution

Combining the growth of BTC, Ethereum and Ripple’s XRP over the fiscal year has contributed over $250 billion to the industry’s value. Increase in market value has many institutional investors setting their sights on cryptocurrency.

Deutsche Bank’s strategist Jim Reid reports that investors are increasingly demanding to use bitcoin instead of gold to hedge dollar risk and inflation.

With things looking great, some analysts have concerns about whether this upsurge will last into the new year.

Following the 2017 boom, BTC investors watched the digital currency draw close to the $20,000 level before suffering a massive crash that saw value drop below $3,300 within a few months.

The extreme volatility of cryptocurrency is an attribute that experts recommend investors bear in mind despite BTC’s recent record-breaking achievement.

When asked about the topic, Bank of England Governor Andrew Bailey suggested he had doubts about BTC as a viable payment method.

“They don’t have any connection to money at all… their value can fluctuate widely unsurprisingly. They strike me as fundamentally unsuited to the world of payments where a certainty of value matters.” – Andrew Bailey

However, several hedge fund managers suggest that BTC will soon beat gold as a store of value as the demand for alternative currencies grows in response to constant fiat money debasement.

Is it too late to get involved?

Despite the sudden surge in value, it is not too late to get involved in the cryptocurrency market. It is important to understand that BTC and other alt coins are not designed to be investments as they do not pay investors dividends.

Rather, cryptocurrency should be seen as a medium of exchange similar to an actual real-world currency like pounds or yen. The value of a digital currency is strictly determined by the market and levels of demand.

There are hundreds of cryptocurrencies each varying in price and reliability. Given its current position, BTC can be considered the most reliable with Ethereum seen as a close second.

Ripple’s XRP and Litecoin are other cheaper alternatives for users that don’t have the capital to purchase large value cryptocurrency. As mentioned previously, cryptocurrency can be extremely volatile, so it is important to conduct further research on the variation you wish to explore.

How do I get started?

Since cryptocurrencies can’t be purchased at any financial institutions, cryptocurrency purchases are made on dedicated cryptocurrency exchanges.

We recommend  Crypto and Coinbase as good places to start your crypto journey. Both exchange platforms act as specialised brokerage firms for cryptocurrency and offer apps available on all devices allowing you to invest safely from anywhere.

How can I get better at personal finance?

To get better at personal finance you should quantify your money habits by tracking your spending and income.

Next, make a goal for yourself to better your savings rate or start investing. Commit to your goal and check in with yourself each month to make sure you are on track. Try to keep your spending within your budget to keep it sustainable.

What is the best way to manage money?

The best way to manage your money is to see it as a tool to help you through life. Take a look at your finances and see where your weaknesses or vulnerabilities may lie.

Then set goals to get your finances back on track to where you want them to be. Budgeting will be how you achieve those goals and some of your goals may be saving for retirement, establishing an emergency fund, or paying off debt.

Check in with yourself to make sure you are on track to accomplish your goals. 

How much should I have in savings?

It’s a good idea to have three to six months’ worth of expenses saved in case of emergencies. For example, if your monthly spending is usually around £5,000 try to keep your savings account balance above £30,000.

Once you have your emergency fund full, you can use your savings as a place to build up funds for big purchases like a house or car down payment.

How much money should I save each month?

Usually, it is recommended that you save at least 20% of your income each month. If you can stick to this, you’ll have a nest egg for emergencies or down payments on any large purchases to keep borrowing at a minimum and your interest rates low.

How much is too much in savings?

You should try to have three to six months’ worth of your average living expenses, including rent, utilities, food etc. saved in case of emergencies.

Any more savings that might be useful for a down payment on a home or car. If you don’t foresee any large purchase in your future, then you should allocate that extra money into something that gains a bit more interest than your savings account might, for example, invest in a stock portfolio.

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Categories: Personal Finance
Tags: cryptocurrency