Bitcoin heads back towards $10,000 a coin milestone ahead of Facebook’s expected entry into cryptocurrency
- Bitcoin is now at its highest level since last April, trading at around $9,300
- This is likely due to investors’ renewed confidence in cryptocurrency
- Facebook is expected to launch its own cryptocurrency, which experts say has played a large role in the recent bitcoin rally
Facebook’s announcement it is looking to launch its own cryptocurrency has helped spur a bitcoin rally that has seen it climb to its highest level since April 2018.
The world’s largest digital currency is currently trading at around $9,300, having seen its price shoot up nearly $6,000 since the start of March.
Bitcoin effectively bottomed out at the end of last year, having seen its price crash from nearly $20,000 a coin in mid-December 2017.
The recent spike that has seen the price of bitcoin race towards $10,000 a coin is likely down to confirmation from regulators that the social network giant was in talks over moving into launching – and testing – digital currency, according to experts.
Having crashed spectacularly at the end of 2018, Bitcoin is now on its way back towards the $10,000 mark and currently sits at a 14-month high
GlobalCoin, as the cryptocurrency is reputed to be called, will however work slightly differently to bitcoin.
While the original cryptocurrency was founded on the principal that it’d be separate from banks and existing organisations, Facebook’s offer is said to be backed by the likes of PayPal, Visa and MasterCard.
It is expected to be released this week, and the project is expected to cost $1billion. It will allow Facebook’s users to convert international currencies into digital coins, and will apparently be pegged to the US dollar.
Christel Quek, the co-founder of entertainment providing start-up BOLT, said Facebook’s plans to unveil a digital currency had led investors to scramble back into crypto.
She said: ‘Investors are scrambling back into crypto assets such as bitcoin and other alternate tokens, over optimism that they are becoming widely accepted and adopted by mainstream entities.
‘Facebook’s entry into the crypto space perhaps signifies the biggest network potential for digital currencies, capable of reaching into billions, and therefore indicates an upcoming shift in mainstream finance.’
According to Forbes, more than $19billion worth of bitcoin was traded across cryptocurrency exchanges over the weekend, perhaps in anticipation of Facebook’s unveiling.
Fellow cryptocurrencies ethereum and litecoin have also seen steep price rises in recent months, though both are trading at far less than the $9,300 price of bitcoin.
Fellow cryptocurrency Ethereum has also seen a pretty spectacular recovery in recent months
Ethereum has since its price jump from $170 to $270 since May 10, while Litecoin has increased from $73 to $136 over the same period.
While the Facebook hype does likely play a role, in the case of the latter there may be a separate reason that is just as responsible.
The world’s fourth largest cryptocurrency will see a ‘halving’ in August this year, designed to control inflation.
Litecoin, the fourth-largest cryptocurrency, has also seen a rally, but experts say that is also down to a ‘halving’ in August that will cut supply in half
The automatic process means those who try and mine the cryptocurrency will see the supply cut in half – earning 50 per cent fewer coins for every block mined after the August 5 halving.
Omkar Godbole of Coindesk said that associating litecoin’s rally with the impending halving deadline ‘makes sense as the process results in reduced production of the cryptocurrency’s supply.
‘Miners will be earning 50 percent fewer coins for every block mined after August and will be adding significantly fewer litecoins to the software’s ecosystem, possibly leading to supply deficit.
‘Markets are always forward-looking and tend to price in such supply-altering events often several months in advance.
‘Backing that argument is historical data which shows the price of litecoin had rallied sharply in seven months leading up to its first reward halving, which took place on August 25, 2016.’