SAN FRANCISCO – Bitcoin reached a new high above $ 47,000 on Monday, shooting up more than 45 percent from the beginning of the year.
Other digital currencies – with names such as Terra and Solana – also rose sharply.
Even Dogecoin, a cryptocurrency that started as a joke with an eternally amazed Shiba Inu dog for its symbol, rose nearly 1,000 percent last week to set a record.
The rally is a moment of euphoria for the thousands of different versions of digital money, dismissed years ago as just less than online Beanie Babies trapped in a speculative bubble. While cryptocurrencies are often rising and falling, the latest surge is falling in size – for the first time, the value of all cryptocurrencies has risen above $ 1 trillion in the past month – as well as the number of people using digital tokens for practical purposes purposes and the key players involved.
On Monday, the apparent reason for the protest was an announcement from Tesla, the electric car company run by Elon Musk, the richest person in the world. Tesla said it would buy $ 1.5 billion of Bitcoin and accept Bitcoin payments, causing a frenzy of interest.
But the underlying momentum for a rise has been building for about a year. During the period, PayPal joined other consumer programs that enable users to buy, hold and sell cryptocurrencies. Some of the largest hedge fund operators in the world – such as Paul Tudor Jones and Stanley Druckenmiller – have also put money into the new market, in a sign that they are increasingly viewing cryptocurrencies as an asset like gold.
“It’s just a sentimental change in the ocean,” said Meltem Demirors, chief strategy officer at CoinShares, an asset manager for cryptocurrency. “We went from mockery and mockery to the richest man in the world talking about it.”
The protest follows a recent frenzy over the stock of video game retailer GameStop, which was also sparked by memes on social media and Mr. Musk’s funny tweets. Joshua Gans, a professor studying innovation at the University of Toronto’s business school, said both startups feature a new generation of investors who had a lot of time in the pandemic and who had few attractive options to spend their money on. As a result, they became more interested in talking about investing online, he said.
The buying and trading of shares and cryptocurrencies has also become simpler and more accessible, said Mr. Goose said. Square and the trading app Robinhood have introduced both cryptocurrency and stock trading over the past few years. Last year, PayPal also added cryptocurrencies to its app, increasing the audience.
“People have not had the time and surplus to ‘learn’ about trade before,” he said. Goose said. Now stocks and cryptocurrencies are ‘easier’ to buy than ever. ‘
Cryptocurrencies began to appear in 2009 after someone known as Satoshi Nakamoto – whose real identity has never been revealed – unveiled the rules and software for Bitcoin. The virtual currency, which has no physical support, can be sent electronically from one user to another, anywhere in the world. Bitcoin is managed by a decentralized network of computers that keeps track of all transactions, and therefore it cannot be controlled by a government or company.
Bitcoin was initially described as a way to pay for things online. But the need for transactions carried out by the decentralized system has delayed payments.
Over time, investors became more interested in Bitcoin because it was not controlled by any government or company. The software that sets the rules for Bitcoin also allows only 21 million Bitcoin to ever be created, so it was a scarce resource.
These features have created periods of boom for Bitcoin and other digital currencies. In 2017, after a rapid run-up, the price of Bitcoin plummeted. But since the coronavirus pandemic, a new set of powerful investors and companies have entered the market.
They have hedge fund operators like Mr. Tudor Jones and Mr. Druckenmiller included, as well as Ray Dalio, the founder of Bridgewater. While Mr. Dalio expressed skepticism about Bitcoin last November, last month he published an essay on further study describing the cryptocurrency as “a hell of an invention”. He added that he is considering putting money into Bitcoin.
Other proponents of Bitcoin include Jack Dorsey, CEO of Twitter and Square. Square invested $ 50 million in Bitcoin at the end of last year. And Mr. Dorsey, whose profile is #bitcoin on Twitter, regularly tweeted about the features of virtual currencies.
Last year, Michael Saylor, CEO of software company Microstrategies, also poured money into his company’s balance sheet in Bitcoin. He has since seen it triple in value to about $ 3 billion, according to the website Bitcointreasuries.org. Mr. Saylor said he took the step because he believes the value of traditional currencies will decline over time, making the scarcity of Bitcoin more valuable.
“For anything in which anyone invests as a valuable store, it seems like it’s better to move it into Bitcoin,” he said. Saylor said in November.
Mr. Musk spoke with Mr. Saylor talks on Twitter in recent months on the imitation of the strategy. When Tesla filed a lawsuit Monday, it said it had bought $ 1.5 billion in Bitcoin to maximize the return on our cash.
Mr. Musk has fueled the fever surrounding cryptocurrencies through other tweets. Last month, Mr. Musk mnr. Dorsey followed by changing his Twitter profile to #bitcoin. He removed the description a few days ago, but posted other encouraging – and sometimes cryptic – messages about virtual currencies.
He also talked about Dogecoin, a coin that was created in 2012 as a playful experiment to get people to try out the technology. In the past month, Mr. Musk of cryptic jokes about Dogecoin (“One word: doge”) posted to semi-serious arguments why it can be taken seriously (“Doge seems to be inflationary, but does not make sense”).
Other celebrities tackled the Dogecoin case with their own viral tweets. Rapper Snoop Dogg responded to a tweet from Mr. Musk with a photo of himself as Snoop Doge.
In addition to people chasing the latest online joke, using more cryptocurrencies for more serious purposes. Ethereum, the second most valuable digital sign, has created applications that enable new types of financial transactions. Unlike Bitcoin, which only supports the storage and movement of money, Ethereum makes it possible to use a computer network for more complex types of calculation and transactions.
One popular application on Ethereum, called Aave, enables people to borrow and lend cryptocurrencies, with interest payments being transferred directly between users without the involvement of a financial company.
According to the website DefiPulse, the system had more than $ 5 million in outstanding loans as of Monday. According to Coinbase, Ethereum also hit a high of $ 1,776 on Monday, up 134 percent from the beginning of the year.
“In 2017, people just bought something that was for sale,” she said. Demirors said. “Now people know what they are buying and they are asking smart questions. It feels very different. ”
Michael J. de la Merced and Ephrat Livni contribution made.