Bitcoin has hit a new all-time high. Just 24 hours after shooting beyond the $20,000 mark, the world’s number one digital currency by market cap has surged to $22,700, roughly $2,000 higher than where it stood just 24 hours ago.
Bitcoin Is Growing Like Never Before
The currency has been on a serious surge over the past few weeks. Considering the asset was, at one point in mid-March, trapped below the $4,000 for a brief period, the currency has added close to $20,000 to its price in just nine short months. Except for a somewhat bearish September, which is typical for bitcoin, the currency has been on a high streak since the beginning of the year.
Coin Metrics says that the currency has added more than ten percent to its overall price within the last day, and that bitcoin is up roughly 200 percent since the beginning of the year.
Many analysts are now discussing what could potentially be behind the sudden surge. Eric Demuth – CEO and co-founder of the crypto trading app Bit Panda – states that this rally is largely driven by institutional investors, which is the primary difference between now and the bull run that occurred three years ago in 2017. That run was primarily powered by retailers.
He also says that many players see bitcoin as a potential hedge tool against inflation. They have seen traditional currencies fall repeatedly throughout the year and likely believe that bitcoin makes a solid alternative to items like gold, which is typically seen as the ultimate store of wealth. He says:
This run is completely different to the one in 2017. Back then, the price was driven by mainly retail investors. Now, we additionally have billionaires praising bitcoin and investment funds securing significant positions worth hundreds of millions. The big players that were once very distant from bitcoin and were outspoke critics are now joining in with the run.
Michael Sonnenshein – managing director of Grayscale, a digital currency manager – states in a recent interview that the company’s crypto holdings have increased by roughly six times what they were in the year 2019. He mentions:
Our flows are now probably up six times what they were last year, and the types of investors that are putting capital to work are unlike any of the investors we’ve seen ever before. It’s some of the world’s largest investors.
As of early December, the total assets that Grayscale manages is equal to roughly $10.8 billion.
Don’t Get Too Excited Yet
Despite bitcoin’s solid run, many are warning their followers that now may not necessarily be the time to get involved. Jay Smith, for example – a crypto bull and investor with e-Toro – has issued a warning to retailers who may be new to the crypto game, claiming:
It’s a hold for now. We are entering new territory, and it feels like bitcoin is finally being accepted as a new asset class, but there is still a long way to go.