Bitcoin surges to all-time record as 2020 rally powers on

Bitcoin surges to all-time record as 2020 rally powers on

Bitcoin hit a record high on Monday of US$19,864, breaking its prior record set in Dec. 2017 as its 2020 rally powered on.

FILE PHOTO: Illumination of the stock graph is seen on the representations of virtual currency Bitc
FILE PHOTO: Illumination of the stock graph is seen on the representations of virtual currency Bitcoin in this picture illustration taken taken March 13, 2020. REUTERS/Dado Ruvic/Illustration/File Photo

LONDON/NEW YORK: Bitcoin soared to a record high against the dollar on Monday, as its 2020 rally steamed 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 unit touched an all-time peak of US$19,864.15, breaking its prior record set nearly three years ago. It was last up 6.1per cent at US$19,306.35.

Last Friday, however, bitcoin dropped more than 8per cent, below US$17,000, before rebounding on Monday.

Bitcoin overall has gained more than 170per cent this year, fuelled by a 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.

Smaller coins ethereum and XRP, which often move in tandem with bitcoin, gained 5.6per cent and 6.6per cent, respectively.

Christopher Bendiksen, head of research at CoinShares, also cited continued corporate and institutional interest as well as post-Thanksgiving retail demand for bitcoin's renewed surge.

"While circumstantial, price action really started picking up speed when the U.S. woke up this morning, which could reflect buying pressure from retail-oriented platforms such as Square's CashApp, Robinhood and PayPal," he added.

Square's Cash App and PayPal, which recently launched a crypto service to its more than 300 million users, have 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's 12-year history has been peppered with steep gains and equally sharp drops. Compared to traditional assets, its market is highly opaque.

Analysts say the bitcoin market has evolved since 2017, now boasting a functioning derivatives market and custody services by major financial firms.

The shifts have made it easier for professional investors from hedge funds to family offices to seek exposure to crypto, and as a result markets are, in general, more liquid and less volatile.

Bitcoin's march to its prior peak - reached after frenzied buying by retail investors from Japan to the United States - saw the cryptocurrency gain over 250per cent in just 35 days before losing 70per cent of its value in less than two months after its December 2017 high.

(Reporting by Tom Wilson in London and Gertrude Chavez-Dreyfuss in New York; Editing by Thyagaraju Adinarayan and Nick Zieminski)

Source: Reuters