Bitcoin’s price rallied to a fresh all-time high on Friday, smashing past $41,000 for the first time as investors increasingly view the cryptocurrency as an inflation hedge.
The world’s most valuable cryptocurrency traded as high as $41,973 at 10:10 a.m. ET, according to data from Coin Metrics. It’s since fallen back below the $41,000 mark, and was last trading up about 4% from a day earlier, at $40,590.
Bitcoin has extended its 2020 rally — which saw it skyrocket over 300% — into the new year. It is currently up roughly 40% so far in 2021, and on track to post its second-best week since the peak of the December 2017 surge.
The cryptocurrency’s blistering bull run has attracted attention from institutional investors, who view it as a potential safe haven asset akin to gold. Strategists at JPMorgan recently said that bitcoin could hit $146,000 in the long term, as it competes with gold as an “alternative” currency.
The idea of bitcoin as a hedge against inflation has continued to gain traction among investors, amid unprecedented stimulus from governments around the world to tackle the coronavirus crisis. Analysts have argued such action could lead to a spike in inflation.
Still, skeptics like American stock broker Peter Schiff and economist Nouriel Roubini view bitcoin as a speculative asset with no intrinsic value and a market bubble likely to burst at some point.
Bank of America released a note Tuesday calling bitcoin the “mother-of-all bubbles,” with an accompanying chart showing how the virtual currency’s spectacular rise compares to other market bubbles like the dotcom boom of the late 1990s and the U.S. housing bubble in the mid-2000s.
There are signs of a sharp rise in demand for cryptocurrencies from retail investors, who fear they may miss out on the action. Crypto exchanges such as Coinbase and Binance have seen spikes in activity, often resulting in technical issues on their platforms, while Google search interest in “bitcoin” rose significantly at the start of the month.
Source: Finance - cnbc.com
