Bitcoin has soared to a record high against the US dollar Monday (Nov 30), with its 2020 rally steam ahead, boosted by increased demand from both institutional and retail investors that saw the virtual currency as a safe-haven and a hedge against inflation.
The digital currency touted an all-time peak of a whopping US$19,864.15 (S$26,615), breaking its prior record set nearly three years ago. It was last up 6.1 per cent at US$19,306.35.
Bitcoin, albeit remains highly volatile. Last Friday, it dropped more than 8 per cent, below US$17,000, before rebounding on Monday.
Bitcoin has thus posted an average daily move of gains of 2.7 per cent this year, according to data compiled by Bloomberg. That compares with swings of 0.9 per cent for the price of gold, which is sometimes contrasted with digital assets and also hit a record in 2020.
Bitcoin overall has gained more than 170 per cent this year, thus fuelled by a high demand for riskier assets amid unprecedented fiscal and monetary stimulus, hunger for assets perceived as resistant to inflation, and expectations that cryptocurrencies would win mainstream acceptance.
“Bitcoin is a natural safe haven for those seeking shelter from rapidly increasing central bank money printing and the inflation that everyone agrees is already increasing,” said Sergey Nazarov, co-founder of Chainlink, a decentralized network that provides data to smart contracts on the blockchain platform.
Smaller coins such as ethereum and XRP XRP-BTSP, which are often move in tandem with bitcoin, gained 5.6 per cent and 6.6 per cent, respectively.
Christopher Bendiksen, the head of research at company CoinShares, also stated that continuous and institutional interest as well as post-Thanksgiving retail demand for bitcoin’s renewed surge into the markets.
“While circumstantial, price action really started picking up speed when the US woke up this morning, which could reflect buying pressure from retail-oriented platforms such as Square’s CashApp, Robinhood and PayPal,” he added. https://www.straitstimes.com/embed/6213214443001
Square’s Cash App and also PayPal, which recently launched a crypto service to its more than 300 million of it’s users, has been scooping up all new bitcoins, hedge fund Pantera Capital said in its letter to investors a fee weeks ago.
That has caused a bitcoin shortage and has driven the rally in the last few weeks.
Bitcoin with it’s 12-year history has seen steep gains and very sharp drops. Bitcoin has also had another previous high of US$19,511 in December 2017 amidst widespread popularity, albeit only to lose 70 per cent over the course of the following year.
In many ways, 2020 proved that Bitcoin was bound to have a comeback, with global central banks driving borrowing rates to record lows and providing much needed stimulus because of Covid-19, time will tell if the comeback will sustain and create a new benchmark for new investors to buy bitcoin as the digital currency continues to make it’s way into the the main stream banking systems worldwide, bitcoin will only continue to increase in value.