Bitcoin jumps to record $28,600 as 2020 rally reaches new heights

The world’s most popular cryptocurrency was last up 2.3 per cent at $28,012. It has surged by nearly half since breaking $20,000 for the first time on Dec. 16. This means that the cryptocurrency has quadrupled in price this year.

It is up 47 per cent since the start of December and is on track for its biggest monthly gain since May 2019.

Bitcoin has increasingly seen demand from larger U.S. investors in particular, attracted by its perceived inflation-hedging qualities and potential for quick gains, as well as expectations it would become a mainstream payments method.

Bitcoin has gained status as a safe-haven investment, and many believe it is now competing as an alternative to gold for investments of this type.  Gold, the traditional safe-haven investment, has declined since hitting a record high of more than $2,000 an ounce in August, and is now flat at $1,879 an ounce.

Investors said that the limited supply of bitcoin – produced by so-called “mining” computers that validate blocks of transactions by competing to solve mathematical puzzles – has helped power upward moves over recent days.

Many recent entrants to the market are holding onto positions, they said.

“The supply side to the bitcoin market will remain tight,” said Jacob Skaaning of crypto hedge fund ARK36.

The latest gains took bitcoin’s market capitalisation past $518 billion, according to industry website CoinMarketCap.

Bitcoin has also been boosted by expectations that it will become a more mainstream payment method. PayPal has launched a crypto trading service on its platform and has reportedly bought nearly 70 per cent of all new bitcoin in circulation. A number of hedge fund managers have revealed this year that they have made large investments in the original cryptocurrency.

Other major cryptocurrencies, which tend to move in tandem with bitcoin, were flat. Ethereum, the second biggest, was down 0.4 per cent, on track for a 2020 gain of around 465 per cent.

REUTERS