Bitcoin advanced by 2.45% against the US dollar yesterday, recovering from the previous session's losses and closing at the 39,301.0 level. In weekly terms, Bitcoin has advanced by 4.12% against the greenback, breaking a two-week losing streak.
Bitcoin has been suffering from a lot of volatility in the last couple of weeks, mainly because of Tesla's decision not to receive payments in this cryptocurrency and because of China’s intention to restrict Bitcoin mining due to environmental concerns.
The latest country that decided to ban Bitcoin mining is Iran, which has many cities that are suffering from power shortages and blackouts. The ban is temporary and is set to end on 22 September.
Around 4.5% of Bitcoins that were mined between January and April this year were mined in Iran, which makes it one of the top 10 mining countries.
According to the Iranian government, most of the energy consumption is coming from illegal miners, which has pushed the government to hunt down unlicensed miners and to cut electricity to legal Bitcoin miners in order to be able to satisfy domestic demand, which has increased due to the pandemic. Another factor that is boosting energy consumption is the fact that temperatures are rising, which has made it harder for some medical institutions to run their cold storage facilities for the vaccines.
Other countries that have considered restricting the cryptocurrency markets include the United States, whose government has expressed concerns regarding the use of Bitcoin for illicit purposes, and India, which is looking to restrict cryptocurrencies mining, holding and distribution.
There are still Bitcoin enthusiasts in the markets, and some even think that eventually it will turn into a solid alternative to fiat currencies. Goldman Sachs considers Bitcoin to be a new asset class that doesn't behave as one would intuitively expect, based on the behavior of other assets.
"Bitcoin is now considered an investable asset," commented an analyst at Goldman Sachs. "It has its own idiosyncratic risk, partly because it’s still relatively new and going through an adoption phase.”
They also commented that it cannot be considered an alternative to gold, given its risky nature.
Goldman Sachs is one of the large financial institutions that has expressed enthusiasm for the cryptocurrency and is considering offering it to its clients. Despite the fact that Goldman Sachs’ seal of approval carries weight, Bitcoin continues to be a very volatile asset, and we shouldn't discard the possibility of wild market movements in the future.