After the all-time high in 2017, the cryptocurrency Bitcoin is climbing to new records these days. But then investors make money again – and the price remains below an important threshold.
Frankfurt / Main – The hope of many Bitcoin fans for a steady price development has not initially come true. On the contrary: after the digital currency, which is the largest digital currency in terms of market volume, hit another record high on Tuesday morning, it collapsed in the afternoon. In the morning it initially looked as if the cryptocurrency could exceed the mark of 20,000 US dollars for the first time.
At $ 19,918, a record high has meanwhile been set on the Bitstamp trading platform. In the early afternoon, however, the rate fell to $ 18,100.
The Internet currency, which was around a decade old, only passed its record high from 2017 on Monday. This had raised hopes among optimists that this time the price increase would be more sustainable than during the wild record hunt about three years ago. At that time, the drastic price increase was followed by an equally drastic price decline.
Bitcoin proponents give solid reasons for their hope for more stability. A few weeks ago, the large payment service PayPal granted a kind of accolade by announcing payment with Bitcoin and Co. It is also stated that professional investors such as asset managers are increasingly interested in cryptocurrencies, which makes short-term price capers at least less likely.
Consumer advocates warn of exchange rate fluctuations
However, the latest price move is likely to confirm the warnings from consumer advocates who see crypto currencies as a “high-risk speculative object”. “Crypto currencies are subject to strong exchange rate fluctuations,” warned the Hamburg consumer center recently. Their value depends solely on demand. “If the demand collapses, the currency also loses value.” The consumer advocates point out that Bitcoins do not generate any additional interest. “Another disadvantage: the market for cryptocurrencies is not regulated by a financial regulator. There are no state security systems. “
In the long-term valuation of Bitcoin, the fact that the cryptocurrency is defined as a finite resource and thus a fundamentally scarce good plays a decisive role. In 2008, someone using the pseudonym Satoshi Nakamoto published a document describing a digital currency. In 2009, the associated Bitcoin software was made public. The highest number of Bitcoin has been set in the paper at just under 21 million Bitcoin. This maximum amount of money is also tied down in the Bitcoin code. Therefore, additional money cannot be “printed” here, as with conventional currencies that are controlled by a central bank.
Value threatened by government regulation
Compared to trading in other scarce assets such as gold, however, Bitcoin is a comparatively small project. Against this background, experts like the Frankfurt economist Philipp Sandner point out that the Bitcoin market has a relatively low level of liquidity. “This is also a reason for the high volatility.”
The value of Bitcoin is also threatened by possible government regulation. If economic areas such as the People’s Republic of China, the United States or the European Union were to strictly regulate or even prohibit trading in Bitcoin, the exchange rate for the classic currencies could collapse accordingly. In addition, Bitcoin competes with other cryptocurrencies such as Ethereum or Ripple’s XRP, which can also be “mined” with significantly less power consumption.