At this point, cryptocurrency’s year can only be described as ridiculous.
Bitcoin, the original and highest-profile distributed digital currency, has been on a sustained rally since last December. Now it has reached yet another all-time high, hitting $4044 on the CoinMarketCap index as of this writing.
That means an investment in Bitcoin made on January 1st, at a value of $973, would have produced a 315% return today – or an annualized return of over 900%.
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The entire cryptocurrency sector has been on a tear this year, as major institutions pursue applications for the underlying blockchain security protocol: Bank of America has filed more than 20 block chain patents and Microsoft is adding blockchain tech to its cloud services. Meanwhile cryptocurrency startups have been raising huge amounts of money, both via traditional channels and through so-called Initial Coin Offerings (which the SEC recently signaled it would crack down on).
Bitcoin’s latest record high is particularly notable given that valuations for other cryptocurrencies, including stalwarts such as Ethereum and Litecoin, were down in recent days.
This discrepancy is actually a good thing, as it signals that cryptocurrency investors are making substantive choices between the competing systems. Bitcoin’s fundamentals have made major progress in recent weeks, and Segwit2x, a long-awaited and contentious software upgrade, is on its way to implementation.
Segwit2x will make Bitcoin more usable for individual transactions and as a financial ‘backbone’ for secondary services. So while there’s certainly plenty of dumb money flooding into Bitcoin, there’s also more than just mania behind investors’ continued bullishness.