Digital Assets: Bitcoin Smashes Past $35K
The leading cryptocurrency sets yet another new all-time high in 2021.
For those impressed by the 16.26% return the S&P 500 clocked in all of 2020, here’s something to chew on. At the time of writing, bitcoin is sitting pretty on a gain of nearly 19% achieved in just six days of the new year. For 2020, the crypto achieved a return of 301.33%. Bitcoin (BTC) struck a new high of $35,879 on January 5 but is currently trading around $34,400. (Bitcoin.com)
Institutional interest fueling BTC
The bullish froth was triggered in 2020 by the sudden adoption of bitcoin by corporates such as MicroStrategy and Square. Also, the opportunity to trade the cryptocurrency on platforms like the Square Cash App and Paypal.
Institutions too piled into the crypto with large inflows pumping into the Grayscale Bitcoin Trust. Traditionally conservative companies such as MassMutual also jumped onto the BTC bandwagon.
Most flows were driven by the fears surrounding the large-scale monetary stimulus across the globe and the depreciation of the purchasing power of the dollar. These could enhance the value of bitcoin as a hedge.
Billionaire hedge fund managers such as Paul Tudor Jones, Scott Minerd, and Stan Druckenmiller have come out in support of BTC. They also backed up their rhetoric with substantial investments.
BTC even overshadowed gold, with several analysts, including JPMorgan, citing the superiority of the digital asset over fuddy-duddy bullion.
JPMorgan sees BTC at $146K
“The valuation and position backdrop has become a lot more challenging for Bitcoin at the beginning of the New Year,” JPMorgan analysts wrote on Monday, according to Bloomberg. “While we cannot exclude the possibility that the current speculative mania will propagate further pushing the Bitcoin price up toward the consensus region of between $50,000-$100,000, we believe that such price levels would prove unsustainable.”
“A crowding out of gold as an ‘alternative’ currency implies big upside for Bitcoin over the long term,” JPM said. However, “a convergence in volatilities between Bitcoin and gold is unlikely to happen quickly and is in our mind a multiyear process. This implies that the above-$146,000 theoretical Bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year.”
Related Story: Fresh Bid By VanEck For A Bitcoin ETF
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