The value of Bitcoin has reached an all-time high of more than $21,000.
The cryptocurrency surged more than 6% on Wednesday to reach 21,500 against the US dollar, continuing its winning streak this year amid growing interest among major investment firms being drawn to its potential for quick gains.
Bitcoin's price has surged more than 400% this year from a low near $3,600 in March, when the coronavirus pandemic triggered a massive sell-off in financial markets around the world.
In the analysts' view, unlike previous highs, the main driver of the current rally appeared to be institutional investors' buying of the cryptocurrency.
“They are attracted by the good returns that the digital asset class is currently offering, but more importantly, by its huge future potential and given that some of the world’s largest institutions – payment companies among them,” said Nigel Green, CEO of DeVery Group, a finance company that operates the Bitcoin platform. Multinationals and Wall Street giants – more than ever they are turning to cryptocurrency, bringing with it their vast experience and capital, which in turn is driving up consumer interest.”
Investors are increasingly interested in bitcoin as a potential way to guard against inflation. Expectations of higher inflation rates have increased in recent weeks, spurred by the prospect of a stronger global economic recovery next year thanks to the Covid vaccine and stimulus measures from central banks and governments in advanced economies.
Raffer, a UK-based investment management firm with more than £20 billion in assets under management, invested last month in bitcoin, which is now worth around £550 million, in one of the biggest indicators of growing demand among investment managers. traditionalists.
A spokesman said the move aims to diversify Raffer's portfolio into gold and inflation-linked bonds. "This acts as a hedge for some of the risks that we see in the fragile monetary system and distorted financial markets."
Ayush Ansal, chief investment officer at Crimson Black Capital, a hedge fund, also said that public interest in bitcoin will be renewed over Christmas.
“Bitcoin has been threatening the psychological $20,000 mark for some time and has finally breached it.”