Bitcoin hits all-time high of over $23,700written by Bella Palmer
Bitcoin has paused its climb after surging 222 per cent since the start of the year
Bitcoin hit an all-time high of over $23,700 this week as more and more institutional investors get on board with 'digital gold'.
In a remarkable week during which it rose almost 30 per cent, the world's best known cryptocurrency jumped to a record high of $23,770 on Thursday - just a day after passing the $20,000 milestone for the first time.
Having surged by a massive 222 per cent since the start of the year, Bitcoin has paused its climb, but is holding its ground at around $23,000.
Analysts expect Bitcoin to behave differently from its previous peak in December 2017, when it jumped close to $20,000, only to crash back down towards $11,000 in a matter of days.
They believe Bitcoin's surge this time around will be sustained as it has not been driven by speculation and interest from casual investors.
Rather, they say the surge is down to interest from institutional investors, who increasingly see it as equivalent to gold at a time when central banks continue to pump billions into economies across the world.
There are fears that recent large-scale monetary easing will result in traditional currencies losing their value and a spike in inflation, and Bitcoin is seen as a way to protect the value of their investments.
On Wednesday - a day before Bitcoin hit a new record high - Ruffer Investment Company announced that it had added bitcoin to its portfolio.
In an unusual move, the investment trust decided to allocate 2.5 per cent of the portfolio to Bitcoin, saying it is doing so to hedge against monetary and market risks.
Unlike three years ago, current buying is driven by corporates, major institutional holders, dedicated funds, and retail platforms such as Square and Paypal, asset manager Nickel said. The Covid-19 crisis, and the extraordinary monetary and fiscal response to it, has triggered a fundamental and ongoing repricing of risk assets, within which bitcoin, the ultimate monetary hedge, has a central role to play.
Many institutions are using Bitcoin to cover tail risk of currency debasement and inflationary pressure, triggered by the recent large-scale monetary expansion, they added.
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