Bitcoin, which is currently the most widely used cryptocurrency, is now worth more than $2,000 per coin and some say President Donald Trump is partially responsible.
Rising Prices Of Cryptocurrencies
This year has been a good one for Bitcoin. In March, it was reported that Bitcoin had exceeded the price of gold for the first time since its invention and things have only gotten better since then.
While Bitcoin is the most well-known and most expensive cryptocurrency out there, it is not the only one. Ripple, currently the second highest cryptocurrency, has seen its value rise by more than 1,000 percent in the past month.
The Currency Of Uncertainty
Like gold before it, Bitcoin, along with other cryptocurrencies, thrives in times of uncertainty. Bitcoin has always done well in times when major currencies such as the U.S. dollar or Euro were weak and Trump has spoken about believing that a weaker dollar could make U.S. goods more competitive.
Issues of policy aside, the recent wave of scandals that has rocked the Trump administration, from the firing of FBI Director James Comey to the appointment of an independent counsel to investigate Russia’s role in the 2016 election, has left Washington and the markets in turmoil.
People simply are unsure what is going to happen, and as such, they have doubts about whether the dollar is currently a safe investment. This has led to a surge in the price of Bitcoin and other cryptocurrencies.
Ross Gerber, CEO of the investment firm Gerber Kawasaki, said that Bitcoin is the perfect currency for the uncertain times that we find ourselves in.
— Ross Gerber (@GerberKawasaki) May 22, 2017
Birth Of A Bubble
Understandably, the rising cost of Bitcoin and similar currencies has led some to speculate that we may be seeing the beginning of a bubble that will eventually burst and send the currencies plummeting in value. The problem is that it is difficult to accurately assess the value of Bitcoin because there’s nothing to assess. With stocks, real estate, or gold, we have some framework to assess a standard valuation, but we don’t have that with Bitcoin.
Unlike gold, which is intrinsically valuable, or the dollar, which is backed by the U.S. government, the value of Bitcoin exists only in the minds of those who use it so it is difficult to determine whether we are looking at a bubble or not.