Bitcoin is carrying out a mini revolution in financial markets, holding its positions near $50,000. After two slumps that occurred early this week, experts and market participants predicted a drop to $45,000. However, the digital asset does not obey the market rules. This could be proved by a new record high of Bitcoin's market capitalization.
Just in two hours, the first cryptocurrency skyrocketed by $2,000 to trade at $52,000. Judging by the daily trade volume, Bitcoin's capitalization soared to almost $1 trillion, settling at $970 billion. A new jump in the price took place after the news that the largest holder of Bitcoin intended to invest about $1 billion in the cryptocurrency.
This news proves two obvious facts. Firstly, Bitcoin is riding a wave of luck and benefiting from news about large investments. These facts together with the strong market positions do not allow Bitcoin to return to its previous levels. It was Tesla Motors that gave Bitcoin a strong reason to rise. It was the first to announce large investments in the asset. Moreover, Charlie Lee, a creator of Litecoin, is sure that other big players will also follow the example of Elon Musk. In fact, his predictions have already come true. Investment flows in Bitcoin are increasing every week. Of course, this is reflected in its price.
The second fact is not that positive, but it is still obvious. Bitcoin, like any other cryptocurrency, is extremely volatile. On February 18, at night, the first cryptocurrency surged by $2,000 just in one hour. On February 14, the price of the crypto asset tumbled by 3% in several hours. Next day, it again nosedived by $3,000.
Thus, we can see sharp changes in the price of Bitcoin. They have different time intervals. All this suggests that for the future introduction of cryptocurrencies in financial institutions around the world, we will need appropriate algorithms that will fix certain levels. This will reduce volatility and allow the use of coins in everyday operations. However, it is still unknown whether the cryptocurrency will remain that attractive as it is today. The fact is that these algorithms will affect a rise in digital assets. This is the paradox of cryptocurrencies' volatility. It is possible that we will find out how to solve this problem in the near future.
