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Bitcoin is fast approaching all-time highs that sparked a mania among investors nearly three years ago that ended in a violent crisis.
The controversial digital asset, which was originally touted as an alternative to national currencies like the dollar, rose as much as 2.6% to $ 18,092 on Wednesday. It has more than doubled this year, reminiscent of the 1.375% rebound in 2017 that preceded a 70% decline the following year. Still, advocates and even skeptics say he can keep pushing harder.
“This Bitcoin thing is crazy,” said Matt Maley, chief market strategist at Miller Tabak + Co. “This is the third parabolic move. Only God knows where it will go. “
Its gains this year follow a broader embrace from Wall Street hubs, including Fidelity Investments, which launched a Bitcoin fund over the summer. Some prominent money managers also became cryptocurrencies, with macro-investor Paul Tudor Jones buying the coin as a hedge against potential inflation. And PayPal Holding Inc. said in October that it would allow customers to access cryptocurrencies, spurring bets that more people could start using digital tokens.
Not all established investors are convinced. Bridgewater Associates LP founder Ray Dalio said Tuesday that he “could be missing” something.
But cryptocurrency fans have been watching Bitcoin tick higher all year long, with many having their eyes set on the December 2017 record of nearly $ 20,000, while others are aiming for even higher levels.
“Bitcoin has consistently been one of the best performing assets in the world since its inception,” said Mati Greenspan, founder of Quantum Economics. “This latest increase occurs when the largest players enter the market exhausting what little supply is left for sale.”
While some die-hard cryptocurrency fans have stuck with him through his ups and downs, others have grown charmed by him amid the pandemic. Bitcoin this week received a boost of star power when Maisie Williams, the actress who played Arya Stark on HBO’s “Game of Thrones,” asked her 2.7 million Twitter followers if she should invest in the coin. The query elicited responses from famous crypto investor Mike Novogratz, as well as Elon Musk of Tesla Inc.
Should I bet on bitcoin?
– Maisie Williams (@Maisie_Williams) November 16, 2020
Proponents argue that cryptocurrency can act as a safe haven in times of turmoil and can be a hedge against rampant central bank money printing. Others have been drawn to its spectacular breakthrough this year: the digital currency is up close to 150% in 2020, though it is still 10% off its all-time high.
But institutional adoption has been slow to come amid high crypto volatility and some high-profile cases of hacking and theft. The Justice Department said this month that it is suing over the seizure of more than $ 1 billion in Bitcoins that it says are linked to the Silk Road crime market that closed seven years ago. And in early summer, the Twitter accounts of some of America’s most prominent political and business leaders were hacked in an apparent effort to promote a Bitcoin scam.
Bitcoin has seen an average daily movement of 2.6% this year, according to data compiled by Bloomberg. That compares with 0.9% swings in the price of gold, which is sometimes contrasted with digital assets.
Hugo Rogers, chief investment officer at Deltec Bank & Trust, bought Bitcoin when it was trading around $ 9,300 in June and used any price weakness since then to add it to his portfolio. Bitcoin now accounts for about 5% of your Global Absolute Return Fund, which is important for high-growth technology and biotech companies. It probably won’t stop at the 5% threshold, he said.
“A small position in Bitcoin can go a long way,” Rogers said by phone earlier this month. “There is a lack of an alternative in real assets that can show a comparable performance. If you are going to diversify your portfolio anyway, this is a good place to go. “
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