Most cryptocurrencies have risen dramatically in recent months, with Bitcoin leading the way.

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The cryptocurrency market is on a bullish run, and it’s not only about Bitcoin. We’ve seen Ripple triple in value and Ethereum also hit a new all-time high. Investors who fear higher inflation seek refuge in what they perceive to be the new digital gold, but where Bitcoin leads, the other altcoins will surely follow.

Although cumulative flows in gold and Bitcoin funds moved in a similar way since 2019, Bitcoin lagged behind before pulling ahead. Then, something different started to happen. Gold has seen a -$20 billion outflow while Bitcoin has enjoyed a $7 billion inflow.

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Where did the $13 billion difference go? Probably to the stock market.

Bitcoin futures point to even higher levels

Bitcoin enthusiasts are making all kinds of projections about where the Bitcoin price could go. Some argue that $130k is just around the corner, based on the increased institutional adoption and the scarcity of coins. We will find out soon enough, but meanwhile, Bitcoin futures reached $73,500 a couple of days ago. Are these market inefficiencies or accurate forecasts?

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It’s not all good news. The energy consumption caused by Bitcoin is on the rise. According to the Cambridge Bitcoin Electricity Consumption Estimate in February 2021, 120 TWh of electricity is needed on an annualized basis. This is more than the energy consumed by many countries such as Sweden.

Only six months ago, Bitcoin’s energy use was sitting at around 10 TWh. The six-fold increase in such a short time is truly impressive, with no other market of such large capitalisation delivering similar returns.

Apart from its limited (but growing) usefulness, Bitcoin’s biggest problem is the potential environmental damage from all that energy use. But the Bitcoin bubble will keep inflating… until it bursts.