Bitcoin shatters $20,000 barrier for first time

Long-term holders of bitcoin had been selling the virtual currency after it reached November record peak

NEW YORK:

Bitcoin smashed through $20,000 for the first time on Wednesday, its highest ever, amid increased institutional and corporate interest.

The cryptocurrency hit an all-time peak of $20,800 and was last up 6.4% at $20,675. It has gained more than 170% this year, buoyed by demand from larger investors attracted to its potential for quick gains, purported resistance to inflation and expectations it will become a mainstream payment method.

Smaller coins ethereum and XRP, which often move in tandem with bitcoin, gained 5.4% and 8.1%, respectively.

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“Many of our clients have been expecting bitcoin to surpass its all-time high of $20,000 given the recent news from major institutional players like SGX and MassMutual openly endorsing bitcoin,” said Scott Freeman, co-founder & partner at trading firm JST Capital.

“While this is a major milestone for this nascent asset class, as retail, institutional, and blue-chip investors alike allocate more capital to this space, it would not be surprising to see other coins follow in BTC’s footsteps and for this upward trajectory to be sustained into 2021.”

Bitcoin’s blistering rally has seen a massive flow of coin to North America from East Asia, fuelled by the hunger for bitcoin among bigger and compliance-wary US investors.

British fund manager Ruffer Investment Management, which managed $27.3 billion in assets at end-November, made a bet on bitcoin now worth around $745 million, a spokesman for the company told Reuters.

The rally in bitcoin, which some investors have seen as a potential safe haven, has coincided with spot gold’s drop in recent months.

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Some investors such as hedge funds and family offices have in the past been deterred by the opaque nature of the crypto market. Tightening oversight of the American crypto industry has helped soothe some of those concerns.

After touching a record high just under $20,000 in late November, bitcoin stalled and even went below $17,000, stoking fears that it would be a repeat of the asset’s collapse in 2018.

Glassnode, which provides insight on blockchain data, said long-term holders of bitcoin had been selling the virtual currency after it reached the November record peak. It noted however that this was overall a long-term bullish signal rooted in previous price trends.