Just one day after bitcoin traded above $20,000 for the first time, it leaped to a new record high of $23,770.85, buoyed up on Thursday by increasingly bullish institutional investors, financial-services companies and analysts.
One bitcoin traded at $23,616.17 at noon EST, according to data from Coindesk.
With today’s price movement, bitcoin’s market cap reached $438.15 billion, making it more valuable than Walmart, which has a market cap of $411 billion.
In March 2020, when the Nasdaq, Dow Jones and S&P 500 fell to their one-year lows, bitcoin crashed to $3,800 — it’s one-year low. On Wednesday, the Nasdaq composite index finished at a record high, the S&P 500 was just short of all-time highs and the Dow Jones industrial average slid.
In 2017, Didi Taihuttu of the Netherlands gambled on bitcoin and traded in his family’s nest egg gold for the cryptocurrency. His investment is now almost three times more valuable than it would have been had if he had kept the gold.
“Central banks and governments are slowly starting to understand that bitcoin is the 21st century gold,” Taihuttu told CNBC.
More and more companies, institutions and wealthy investors have started to see bitcoin as a worthwhile long-term investment, helping to drive up demand.
Jack Dorsey’s payments app Square announced a $50 million bitcoin investment in October. PayPal announced it that will allow customers and the 26 million merchants on its network to buy, sell and shop using bitcoin and other virtual coins in its online wallet.
Investors typically seek safe-haven investments — gold, cash — in times of uncertainty, and bitcoin is being treated by many as a safe haven. Bitcoin is up about 200 percent year to date, outperforming gold. Gold has been sliding since its August 2020 all-time high, partly due to optimism over a covid-19 vaccine. If bitcoin is a safe haven, why does it tank when the going gets rough?
Unlike bitcoin’s 2017 rally, some analysts don’t see a price bubble bursting anytime soon, CNBC reported.
“Who needs a safe haven if the pandemic is over?” Scott Nations, of Nations Indexes, told CNBC. “And if you still want a safe haven, you’re not looking at gold. You’re looking at bitcoin.”
Tom Fitzpatrick, global head of CitiFXTechnicals, told Citibank’s institutional clients that there were signs bitcoin could reach $318,000 by December 2021, CNBC reported.
Mike Novogratz, CEO of investment firm Galaxy Digital, predicted that bitcoin will rise to $60,000 by 2021.
Gold is still the leading safe-haven asset by a mile with the top cryptocurrency acting as a risk asset, Cryptobriefing reported. The value proposition of bitcoin is that it’s a superior, digital version of gold. “This thesis does hold merit, but the behavior of market participants doesn’t add up.” Bitcoin’s place as a safe haven asset has been questioned over and over. Each time, the evidence says the top digital asset is a risk asset.
Brian Armstrong, the CEO of crypto exchange Coinbase, warned investors on Thursday about market rallies, Decrypt reported. “While we’re always excited to see increased interest in crypto, it’s also important to point out that this is not only a time of high volumes but also price volatility,” he wrote in a blog.
In its correlation with the stock market, bitcoin’s recent rally has been described as behaving like a tech stock — and that could be bad for investors.
“As a disruptive technology, bitcoin’s risk profile is rather similar to that of a technology stock: if it reaches its potential, the value could be immense, but at the same time, there is a chance it fails entirely, leaving the value of bitcoins close to zero,” wrote CoinShares’ research strategist James Butterfill, according to a Forbes report