Cryptocurrency bitcoin soared to a record high against the dollar on Monday, boosted by increased demand from both institutional and retail investors.
The digital unit touched an all-time peak of $19,864.15, breaking its prior record set nearly three years ago. It was last up 6.1 percent at $19,306.35. Last Friday, however, bitcoin dropped more than 8 percent, below $17,000, before rebounding on Monday.
This year, the asset class saw a climb of 170 percent fuelled on the back of long list of positive triggers: Biden's huge victory, hopes of a fiscal and monetary stimulus, demand for riskier assets, Square's purchase of $50 million in BTC and PayPal's support for crypto operations.
The eye-popping gains that BTC made this year is also due to its small quantity. The ownership of BTC remains highly concentrated in the hands of a small number of investors who are the early adopters of the digital currency.
In fact, according to Flipside Crypto, about 2 percent of the anonymous ownership accounts that can be tracked on the cryptocurrency’s blockchain control 95 percent of the digital asset
“Bitcoin’s moment has arrived,” said Guy Hirsch, managing director for the U.S. at the trading platform eToro, “This rally could still have quite a ways to go.”
Many analysts at the year beginning had predicted the bitcoin rally. Prominent investors including Paul Tudor Jones said they’ve bought the cryptocurrency as a hedge against central bank and government actions.
Brian Estes, chief investment officer at hedge fund Off the Chain Capital predicted bitcoin could hit between $100,000 and $288,000 by end-2021, based on a model that utilizes the stock-to-flow ratio measuring the scarcity of commodities like gold. That model, he said, has a 94 percent correlation with the price of bitcoin.
Few experts also feel that the price could climb even higher. Like, Citi technical analyst Tom Fitzpatrick said in a note earlier that bitcoin could climb as high as $318,000 by the end of next year, citing its limited supply, ease of movement across borders, and opaque ownership.
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 250 percent in just 35 days before losing 70 percent of its value in less than two months after its December 2017 high.