Bitcoin hits a brand new all-time excessive above $ 23,000, extending its wilder rally in 2020
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Bitcoin rose 12%, hitting a new record high of over $ 23,000 on Thursday. This extended a wild rally for the cryptocurrency, the value of which has more than tripled this year.
The world’s most valuable digital currency was last traded at $ 23,421, according to crypto market data provider Coin Metrics, an increase of more than 200% since the start of the year. Bitcoin only just passed the $ 20,000 mark on Wednesday.
Crypto bulls have pointed to increased demand from institutional investors, using bitcoin as a hedge against inflation like gold amid an unprecedented US coronavirus stimulus. In a recent notice published by JPMorgan, it was alleged that such investor appetite would fuel inflows into funds tracking Bitcoin to the detriment of gold.
On Tuesday, the British wealth manager Ruffer announced that around 2.5% of its portfolio was invested in Bitcoin, “as a small but effective insurance policy against the continuing devaluation of the world’s major currencies”. The company had assets under management of £ 20.3 billion ($ 27.6 billion) through November.
Bitcoin’s 2020 performance has reminded many market watchers of its frenzied rally to nearly $ 20,000 in 2017, which was followed by a sharp decline the following year. However, crypto fans claim this year’s rally is different than 2017 in that it will be driven by institutional buying rather than retail speculation.
Well-known investors like Paul Tudor Jones and Stanley Druckermiller have chosen Bitcoin this year, while big financial companies like PayPal and Fidelity have also taken steps in this area. Meanwhile, companies like Square and MicroStrategy have used their own balance sheets to buy Bitcoin.
On Wednesday, Scott Minerd, chief investment officer of Guggenheim Investments, announced a target price of $ 400,000 for Bitcoin, citing the scarcity and relative valuation of assets like gold. It’s worth noting, however, that some investors have made high-profile calls regarding Bitcoin price in 2017, which ultimately didn’t materialize in 2017.
Skeptics see Bitcoin as a speculative asset with no intrinsic value. Investors like billionaire Warren Buffett, CEO of Berkshire Hathaway, say that trading the digital currency is more like gambling.