Bitcoin breached $23 000 for the first time in history as more Wall Street names crowd into the the world’s largest digital currency up 220% this year.
As momentum builds, analysts predict more gains ahead.
The digital coin jumped more than 9% on Thursday, touching a high of $23 256.92, according to a composite of prices compiled by Bloomberg. Bitcoin and the wider Bloomberg Galaxy Crypto Index have both more than tripled this year. Cryptocurrency-linked stocks in South Korea, Japan and China climbed.
The rally in digital assets is polarising opinion, given Bitcoin’s history of boom and bust. Proponents argue the cryptocurrency is muscling in on gold as a portfolio diversifier amid dollar weakness and potential inflationary pressure. Others see speculative fervor that will inevitably lead to a bust akin to the meltdown three years ago after a furious Bitcoin rally.
Yet there are signs that longer term investors like asset managers and family offices are playing more of a role this time around, alongside trend-following quant funds. Bitcoin’s scarcity combined with “rampant money printing” by the Federal Reserve mean the digital token should eventually climb to about $400 000, Scott Minerd, the chief investment officer at Guggenheim Investments, said on Bloomberg TV on Wednesday.
Here’s what people in markets are saying about Bitcoin’s move:
The “price will now go from linear to parabolic” in part because retail investors have so far largely been “out of this rally,” said Kay Van-Petersen, global macro strategist at Saxo Capital Markets Pte in Singapore.
“The move above $20 000 has been coming and I’m probably a little surprised it didn’t come sooner,” said Craig Erlam, senior market analyst at Oanda Europe. “Fed stimulus may have given it an extra kick but, let’s face it, Bitcoin doesn’t need it. A break above $20 000 may bring the buzz and a strong end to the year.”
Bitcoin and gold
“The lowest-ever Bitcoin annual volatility measure versus gold and the stock market near the end of 2020 may sustain the crypto’s performance advantage in 2021,” said Bloomberg Intelligence strategist Mike McGlone in a report. He sees the price ratio of Bitcoin-to-gold headed for 100, if history is repeated, from its current level of around 12.
If Bitcoin sustains its momentum, then “testing $36 000 will be the next real objective,” said Dan Gunsberg, CEO of Hxro, a crypto trading platform. But he indicated that a significant break below $13 800 would herald a much weaker period.