Picture: REUTERS/DADO RUVIC
Picture: REUTERS/DADO RUVIC

Bitcoin surpassed $20,000 for the first time, another milestone in what’s been an eye-popping rally for the controversial digital asset in 2020.

The world’s largest cryptocurrency rose as much as 7.6% to $20,893 in New York on Wednesday, vindicating forecasts that were scoffed at months ago and leading to even higher prognostications. Bitcoin has almost tripled in 2020.

“We have a new line in the sand and the focus shifts to the next round number of $30,000,” said Antoni Trenchev, co-founder and managing partner of Nexo, a crypto lender. This “is the start of a new chapter for bitcoin. It’s a narrative the media and retail crowd can properly latch onto because they’ve been noticeably absent from this rally.”

Bitcoin has surged despite a severe crash in March that saw it lose 25% amid the coronavirus pandemic. Proponents have seized on the narrative that the coin could act as a store of wealth amid supposed rampant central-bank money printing, even as inflation remains mostly muted.

In addition, some Wall Street firms have taken a greater interest, with many seeking to capitalise on its gains in a world of rock-bottom interest rates. Guggenheim Partners, for example, recently said it might invest up to 10% of its $5.3bn Macro Opportunities Fund in a bitcoin trust.

Bitcoin’s cross above $20,000 is its second big milestone in recent weeks — the coin at the end of November reached a new high three years after setting a prior peak. It had traded at a few cents for several years after its late 2008 launch by an unknown software developer in the wake of the global financial crash.

“People tend to pile into momentum trades, so Bitcoin could have more upside from here,” said Ed Campbell, portfolio manager and MD at QMA.

Peer coins also rose on Wednesday, with the Bloomberg Galaxy Crypto Index — which tracks some of the big cryptocurrencies — gaining as much as 7.2%. Dash and Litecoin each advanced at least 6%.

Ether, the second-largest digital asset, after Bitcoin, rose as much as 6.9%, according to data compiled by Bloomberg, so much so that cryptocurrency exchange Coinbase said it was experiencing congestion issues and delays in sending the token. Customers logged complaints about the service on the Downdetector website, which tracks outages.

The rally follows an announcement by the CME Group that it has plans to expand its suite of cryptocurrency derivatives offerings to include Ether futures beginning in February.

To Meltem Demirors, chief strategy officer at CoinShares, Bitcoin’s cross above $20,000 marks an important psychological milestone.

“The biggest thing is the macroeconomic conditions — this is the perfect set-up for Bitcoin,” she said by phone. “From here things are going to move very quickly and I wouldn’t be surprised if we touched $35,000 in the next three to six months.”

Bloomberg

subscribe

Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.