What to Know About Bitcoin as It Approaches $70,000
Bitcoin is trading near all-time highs: The cryptocurrency crossed a record $68,000 this week before dropping slightly lower. It was the latest record high in what can now be considered a tear — the currency also crossed the $60,000 threshold in October, a figure it also hit in spring 2021.
Money is pouring into bitcoin as of late, according to data released Monday by digital asset manager CoinShares. Inflows into bitcoin hit a record $6.4 billion so far for 2021, CoinShares data shows, and $2.8 billion has flowed into bitcoin during the cryptocurrency’s latest eight-week bull run.
It’s not entirely clear what’s driving this latest rally, although volatile price swings are relatively common among bitcoin and other cryptocurrencies. Bitcoin is up about 130% year-to-date.
Investing in cryptocurrencies is somewhat controversial among big-name investors and business leaders. For example, JPMorgan Chase chairman and CEO Jamie Dimon is not a fan. “I personally think that bitcoin is worthless,” he said during an Institute of International Finance event in October.
Conversely, Tim Cook, Apple chief executive, said during the New York Times DealBook Online Summit on Tuesday that he has bought cryptocurrencies. “I think it’s reasonable to own it as part of a diversified portfolio.”
What is bitcoin, and should you invest now?
Bitcoin is a decentralized form of payment intended to eliminate the need for intermediaries like banks and governments. Unlike fiat money (like the U.S. dollars in your bank account) that is government-backed and regulated, bitcoin is powered by a combination of peer-to-peer technology and software-driven cryptography to create a currency backed by code.
Bitcoin is just one of many cryptocurrencies, though it’s by far the largest. Other prominent cryptocurrencies include ethereum and solana. There are also dog-themed cryptocurrencies, including dogecoin and shiba inu, the latter of which saw a massive surge in October 2021, which many attributed to tweets from Tesla CEO Elon Musk. Shiba inu coin is up about 72,000,000% in value over the past year as of press time.
Cryptocurrencies can be purchased from online crypto exchanges, such as Coinbase and Gemini, or through select online brokers, like SoFi and Robinhood. In addition, some cash and payment apps, including Venmo and CashApp, also offer access to a limited selection of cryptocurrencies.
Whether you should invest in bitcoin and other cryptocurrencies depends on your financial situation. One rule of thumb when it comes to alternative investments like this is to ensure they comprise only a small percentage of your overall portfolio, with the bulk of your investments diversified through more traditional assets, like mutual funds.