Bitcoin, after bouncing around less than $ 20,000 per bitcoin for the past month, has broken through the psychological price barrier.
The bitcoin price, hitting $ 20,440 on the Bitstamp exchange in Luxembourg before falling back slightly, is up about 200% over the past 12 months as governments ramp up spending due to coronavirus locks, investors look to bitcoin as a hedge against inflation, and institutional interest in bitcoin rising.
Bitcoin investors, who have praised the rise in bitcoin prices this year, are feeling increasingly bullish as they enter 2021 – with many predicting that the price will continue to climb.
“As we come to the end of what has been an iconic year for bitcoin, I can only see more positive growth in 2021,” the chief executive of the bitcoin and cryptocurrency exchange in the Isle of Man via CoinCorner Danny Scott said by email, drawing attention to US business intelligence company MicroStrategy
Bitcoin’s surge comes in over $ 20,000 after a Reuters report claims that fund manager Ruffer Investment Management has moved about $ 675 million of its clients’ funds into bitcoin. Earlier reports had suggested that the London-based company, which manages about $ 27 billion worth, had allocated a much smaller amount to bitcoin.
“Compared to 2017 when demand came from the retail market, this will eventually happen again, of course, current demand comes from an institutional level that flies completely under the radar for many people and it looks likely to continue through 2021, “added Scott.
MicroStrategy has bought about $ 500 million of bitcoin so far this year, doubling down on its bitcoin bet and raising another $ 650 million through bond sales to buy more bitcoin.
Other companies have followed MicroStrategy’s lead and a number of high-profile investors have named bitcoin as a potential hedge against the inflation they see on the horizon.
Earlier this month, Ray Dalio, the legendary billionaire founder and co-chairman of the world’s largest hedge fund, Bridgewater Associates, admitted that bitcoin has now established itself as a “gold-like asset alternative.”
However, some experienced bitcoin traders offered words of caution to potential buyers of bitcoin.
“History has a warning for people buying at its highest ever,” said financial writer and trading veteran Glen Goodman via email.
“Although I was optimistic about the long-term outlook for bitcoin, four years ago we experienced a very similar situation with bitcoin breaking new ground, but two weeks later its price plunged more than a third.
“History does not always repeat itself, of course, but the lesson is to be on your guard. The market often teaches harsh lessons in humility to those who risk too much of what they are told for sure.
“Some of the biggest investors in the world have been lauding bitcoin in recent weeks. This suggests that they already own bitcoin and hope to encourage more people to buy and boost the price sometimes. Wall Street ‘whales’ do this in order to sell their bitcoins to the little guys at higher prices. “