The price of bitcoin briefly reached a record high of more than $50,000 on Tuesday, adding fuel to the cryptocurrency’s 2021 rally.
Investors have been all-in on bitcoin during the pandemic, sending its value up nearly tenfold since last March. The digital coin’s worth is not influenced by economic policies or conditions such as inflation, which affect the value of traditional currencies. While bitcoin soars, the US dollar has been weakening in value as the Federal Reserve holds interest rates near zero.
The price of bitcoin fell in March to around $5,000 as the coronavirus took hold around the globe, but it has been climbing steadily since then. By the end of 2020, the price had reached nearly $30,000, and it has grown by nearly 65 percent since Jan. 1.
The hype surrounding cryptocurrencies has been propelled by several factors, including a stamp of approval from Elon Musk, the chief executive of Tesla, who has been outspoken about his support for bitcoin. Last week, the electric car maker disclosed that it had invested $1.5 billion in bitcoin and plans to accept it as a form of payment in the future. Musk briefly put “#bitcoin” in his Twitter bio.
Besides Tesla, mainstream companies including Mastercard have signaled that they are open to accepting cryptocurrencies, as well.
Bitcoin was created in 2009 as a decentralized digital currency that does not need to be issued by a bank or a government. And there is a fixed amount of it — approximately 21 million bitcoins.