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

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 $19,864.15, breaking its prior record set nearly three years ago. It was last up 6.1% at $19,306.35.

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

Bitcoin overall has gained more than 170% 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 5.6% and 6.6%, 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.