Bitcoin: what #) $ * # @) ($ is happening with the cryptocurrency?

Bitcoin price exceeds $ 20,000 1:01

New York (CNN Business) -

Bitcoin is crashing… up.

He just passed $ 28,000 and shows no signs of stopping.

The digital currency has a market value of more than $ 500 billion.

Do you think bitcoin is just a fad?

It is already worth more than Visa or Mastercard.

Or Walmart.

• What is bitcoin and how does it work?

Bitcoin topped $ 20,000 for the first time just 11 days ago.

Now he's knocking on the $ 30,000 door.

Its rapid rise has been remarkable, or insane, depending on your appetite for risk.

But there is some logic in the run-up: Investors are pouring money into bitcoin and other cryptocurrencies during the covid-19 pandemic, as the Federal Reserve sent interest rates close to zero (and hopes to keep them there for several more years) , severely weakening the US dollar.

That makes bitcoin an attractive currency by comparison.

There is a limit set to the amount of bitcoins on the planet and investors believe that once the supply is depleted, the value of the digital currency can only increase.

It also helps in the soaring valuation of bitcoin that big brand investors are hoarding it and big consumer companies are embracing it.

That adds a dose of validity and attractiveness to the cryptocurrency for major investors.

For example, a top BlackRock executive recently said that cryptocurrency can replace gold, and both Square and PayPal have embraced bitcoin.

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As bitcoin rises to all-time highs, cryptocurrency brokerage Coinbase, the most prominent cryptocurrency exchange, has signaled its intention to go public.

Bitcoin and its risks

Still, the recent rise in cryptocurrencies is showing signs of a meltdown - excessive enthusiasm fueled by fear of missing out, not simply market fundamentals.

Take Elon Musk's sarcastic tweet about bitcoin rival dogecoin last week: The digital currency, which was itself constructed as a parody of the cryptocurrency, spiked 20% immediately after Musk endorsed it on Twitter. .

Anthony Scaramucci, founder of Skybridge Capital, has a large stake in bitcoin, but even he says that people should be careful.

He told CNN Business earlier this month that it could be a solid addition to the average investor portfolio, but you must have the stomach for it.

On CNN Business's "Markets Now" live show earlier this month, Scaramucci said that people have started accepting bitcoin and since it appears in so few wallets, it has plenty of room to grow.

Still, bitcoin is a volatile asset and it will be a risky holding if you invest in it.

"This has a tendency to crash," he said.

"A correction is expected and these corrections can be violent."

Scaramucci said that bitcoin could suddenly drop between 20% and 50%.

"You have to be very careful," he added.

But he also highlighted the staying power of bitcoin over the course of the last decade: If you took a dollar and put 99 cents in cash and a penny in bitcoin, that investment strategy would have surpassed that of a dollar invested in the S&P 500 during the last 10 years, he noted.

"The best days for bitcoin are ahead, but it's going to be volatile and I think people should be prepared for it," Scaramucci told CNN Business.

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