Bitcoin on Monday rose to a new all-time high of $ 19,864, extending its rise so far to a staggering 170% during 2020 that has seen turbulent swings in global markets.
Here are five reasons why the oldest and largest cryptocurrency has pushed to new heights.
Some institutional investors are embracing bitcoin exposure, such as buying into the publicly traded Grayscale Bitcoin Trust (GBTC), according to a Nov. 20 report from analysts at JPMorgan Chase. (Note: Grayscale is a unit of Digital Currency Group, which owns CoinDesk.) Guggenheim, a money manager overseeing $ 233 billion for investors, said in a regulatory filing that its Macro Opportunity Fund could allocate up to 10% of net assets to GBTC, CoinDesk reported Nov. 28. In addition, the outstanding number of bitcoin futures contracts is surging on the Chicago Mercantile Exchange, seen as another sign that big investors are using commodity markets to speculate on the price of the cryptocurrency, according to the JPMorgan report.
Well-known hedge fund managers are increasingly calling bitcoin a long-term investment. Legendary managers, including Paul Tudor Jones II and Stanley Druckenmiller, have recently said that the price of cryptocurrency, as it is known in US dollars, could rise as the Federal Reserve prints money to help finance bills an emergency government stimulus associated with coronavirus. The central bank has so far created more than $ 3 trillion of new money in 2020, or more than three-quarters of the total amount created during its previous 107-year history.
Wall Street analysts have made positive comments over the past few days. AllianceBernstein, a $ 631 billion money manager, released a report saying the post-pandemic economic environment could create a role for bitcoin in investor asset allocation, CoinDesk reported Monday. Inigo Fraser Jenkins, co-head of the portfolio strategy team at Bernstein Research, wrote, “in terms of a role against hedges against inflation,” the driver of bitcoin is the same as for gold. ”
PayPal (PYPL) allows customers – about 346 million active accounts – to buy bitcoin. The person-to-person payments network announced Oct. 21 that it would let customers buy, sell and hold bitcoin. According to the company, the cryptocurrency will become “a source of financing for purchases in its 26 million traders worldwide.”
The bitcoin market last week overcame a major source of concern – bitcoin outflows from one of the world’s largest cryptocurrency exchanges, OKEx. Some traders and analysts had speculated that a five-week withdrawal suspension of withdrawals could turn into liquidations that could put sales pressure on the bitcoin market. Data extracted from the cryptocurrency’s underlying blockchain network showed that about 24,631 bitcoin, worth $ 500 million at current prices, flowed out of the exchange in the 24 hours after the suspension was lifted last week.
But a bitcoin price action shows the market has shifted away from the news, along with other negative developments, such as rumors that the US Treasury Department may be considering burdensome cryptocurrency regulations. Traders also appeared to be ignoring data that showed that some large bitcoin traders – known as “whales” – may be preparing to dump their holdings in response to cryptocurrency price increases.