Bitcoin continues to trade close to its all-time high reached this month. Its price is now around US $34,000 — up about 77% over the past month and 305% over the past year.
First launched in 2009 as a digital currency, Bitcoin was for a while used as digital money on the fringes of the economy.
It has since become mainstream. Today, it’s used almost exclusively as a kind of “digital gold”. That is to say, a scarce digital asset.
In response to the risk of economic collapse due to COVID, governments around the world have flooded global markets with money created by central banks, in order to boost spending and help save the economy.
But increasing the supply of money erodes its value and leads people to look for inflation-resistant assets to hold. In this climate, Bitcoin has become a hedge against looming inflation and poor returns on other types of assets.