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Friday, Apr 26, 2024

Bitcoin surges above $15,000 and is closing in on record

Bitcoin surges above $15,000 and is closing in on record

Bitcoin soared more than 7% Thursday and was trading above $15,000 — its highest level in nearly three years — as mainstream interest in the cryptocurrency builds and the US dollar weakens.

The value of one bitcoin has more than doubled in 2020. The gains have been particularly dramatic in the past few weeks, with bitcoin rising 40% since early October.

If bitcoin continues to surge, it may not be long before the cryptocurrency finally tops the all-time high of just under $20,000, reached in December 2017.

In addition to the dollar weakening, bitcoin has benefited from more mainstream companies like PayPal (PYPL)and Square (SQ) embracing cryptocurrencies as a viable payments options and investments.

"Nothing is stopping it from going to the 2017 high," said Bill Noble, chief technical analyst with research firm Token Metrics, in an email to CNN Business.

"Everybody is afraid to miss out, and that drives the price."

Lingering uncertainty about the outcome of the presidential election may also be fueling the recent bitcoin spike, Noble added. Investors may be fleeing the dollar and buying bitcoin.

The US Dollar Index, which tracks the greenback versus the euro, yen and several other major currencies, is down about 1.5% so far this week.

Inflation hedge and beneficiary of weaker dollar


Bitcoin, along with gold, may remain momentum bets for investors looking to take advantage of continued dollar weakness. Gold prices, which hit a record high above $2,000 an ounce earlier this year, are up about 30% in 2020.

"The bitcoin and gold rally has been happening all year along with dollar weakness. It's a longer-term trend," said Jeff Mortimer, director of investment strategy for BNY Mellon Wealth Management, in an interview.

With all this in mind, Alex Mashinsky, CEO of cryptocurrency lending firm Celsius Network, is even more bullish on bitcoin.

"Not only is $15,000 going to happen, but I stand by my predictions from the beginning of the year that [bitcoin] will see all new highs before 2021," Mashinsky said in an e-mail.

The rise in bitcoin this year is all the more remarkable when you consider that prices plunged below $5,000 in mid-March during the height of Covid-19 pandemic worries in mid-March.

"Bitcoin comes out stronger after each challenge," said Michael Sonnenshein, managing director of Grayscale Investments, a digital currency asset management firm. "People are looking at bitcoin as a store of value and inflation hedge."

Coronavirus is only making bitcoin even more popular as an investment option.

According to a survey of 1,000 US consumers during the summer by a market research firm on behalf of Grayscale, nearly 40% said that the Covid-19 crisis made bitcoin more appealing as an investment.

Sonnenshein said the realization that bitcoin is probably better as an investment than as an actual form of payment is key to its continued success.

"There used to be a prevalent narrative that because bitcoin is not something you'd go to the store to buy a latte with, it's failed. That's no longer the case," Sonnenshein said.

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