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December 28, 2020 08:35 am

Bitcoin Surges 50% in Just One Month. CNN Ponders 'Insane' Record Run

The price of Bitcoin increased 50% — in the last four weeks. Now priced at $26,579, "Bitcoin is crashing — upward," quips CNN Business:The digital currency has a market value north of $500 billion. Think Bitcoin is just a fad? It's worth more than Visa or Mastercard. Or Walmart... Its rapid rise has been remarkable — or insane, depending on your appetite for risk. But there's some logic to the run-up: Investors are pouring money into bitcoin and other cryptocurrencies during the Covid-19 pandemic as the Federal Reserve sent interest rates near zero (and expects to keep them there for several more years), severely weakening the US dollar. That makes bitcoin, comparatively, an attractive currency. There's a set limit to the number of bitcoins on the planet, and investors believe that once the supply runs out, the digital coin's value can only increase. Also aiding in bitcoin's soaring valuation: Big, name-brand investors are stockpiling it, and huge consumer companies are embracing it. That's adding a dose of validity and appeal to cryptocurrency for mainstream investors. For example, a top executive at BlackRock [the world's largest asset manager, with $7.81 trillion in assets under management] recently said the cryptocurrency can replace gold, and Square and PayPal have both embraced bitcoin. The article also includes some advice from Anthony Scaramucci, founder and managing partner of the global investment firm Skybridge Capital (who was also, for 10 days, White House Communications Director):Scaramucci said people have begun to accept bitcoin — and since it appears in so few portfolios, it has plenty of room to grow. Still, bitcoin is a volatile asset and will be a risky holding if you invest in it. "This thing has a tendency to crash up," he said. "It is due for a correction, and these corrections can be violent." Scaramucci said bitcoin could suddenly tumble 20% to 50%."You have to be very cautious," he added. But he also highlighted bitcoin's staying power over the course of the past decade: If you took $1 and put 99 cents of it in cash and a penny in bitcoin, that investment strategy would have outperformed $1 invested in the S&P 500 over the last 10 years, he noted. "Bitcoin's best days are ahead of it, but it's going to be volatile and I think people need to be prepared for it," Scaramucci told CNN Business.

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