Even at the climax of the epic 2013 rally, the enigmatic cryptocurrency – bitcoin was never able to reach price parity with an ounce of gold… until NOW. The legendary rally was followed by an off-year in 2014 when a major player in bitcoin transactions was plagued with hacks and other problems. But from there, we saw a steady rise in bitcoin price even bagging the title for world’s top performing currency for two straight years in 2015 and 2016. And for the first time, after three years, bitcoin reached parity with the per-ounce price of gold.
A New All-Time High
It’s been a wild ride for bitcoin that began the year 2017 by crossing the $1,000 mark. On March 2, BPI data shows that this virtual currency opened at $1,230.02 until gaining unit-for-unit parity with gold. According to the XAU/USD spot exchange rate provided by Bloomberg Markets, bitcoin reached as much as $1,238.11 while the spot price for an ounce of gold was at $1,237.73.
The continuing climb and price peak resulted from the overall strong sentiment of traders in the market, anticipating the approval of the first-ever bitcoin ETF by the US Securities and Exchange Commission (SEC). The accelerating China outflows – the growing involvement of the People’s Bank of China, in the domestic exchange space also helped. Other factors that drove more enthusiasm toward bitcoin include the talk about Mexico, as well as France, Greece and Italy being active; and the renewed interest in blockchain.
An Exciting Monetary Experiment
In this modern age, cryptocurrency has become the most exciting monetary experiment. Bitcoin holds unique qualities that that no other form of money share, most notably the possibility of total anonymity in electronic transactions. It mimics the scarcity properties of gold that require excessive energy to create just one coin. And its breakthrough in value, even competing with a legendary trading tool, has brought bitcoin to the limelight.
Bitcoin’s Wild Ride in Context
Despite its price rally, the global stock of bitcoin in the market is considered small with 16.2 million BTC in circulation and a modest transaction volume. Its $20 billion total worth is just about half the value of average companies on the S&P 500 ($40 billion). With 5.6 billion ounces of gold that has already been mined throughout history, the gold market dwarfs the bitcoin market by 300 times.
But for enthusiasts and avid followers of the crypto markets, this context only goes to show that there’s still a lot of room for bitcoin to soar.