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Bitcoin has risen above $ 30,000 for the first time, extending a record rally that saw the cryptocurrency surge more than 300 percent last year.
With trading in major financial markets yet to begin in 2021, bitcoin has resumed its dizzying ascent, surging 18 percent in the early days of January to surpass $ 34,000 on Sunday morning.
The rally has fueled concerns that bitcoin will repeat the events of three years ago, when a bull market collapsed dramatically. When the currency hit a record in November, economist Nouriel Roubini called it a “pure asset and a speculative bubble with no fundamental value.”
But some analysts have pointed to an increase in corporate and institutional interest in bitcoin. Well-known investors like Paul Tudor Jones and Stanley Druckenmiller have put their weight behind him, and crypto-focused hedge funds have outshined their peers.
Recent earnings have far outpaced conventional asset classes. Bitcoin was up 305 percent last year, compared to a 16 percent rise in Wall Street’s top-class S&P 500 stock index and a 25 percent rally for gold.
“Despite rising prices and valuations, we believe conditions remain for a continued rally,” Fundstrat analysts said in late December.
They also cited a clearer focus on the sector by US regulators and the possibility that the latest fiscal stimulus package agreed to by Congress could fuel retail demand.
Bitcoin’s frenzied rally has been aided by signs that the cryptocurrency is becoming more integrated into the financial system. In October, PayPal said that US customers would have the option to keep bitcoins in their digital wallets. In December, cryptocurrency exchange Coinbase went public with regulators.
