Bitcoin Crosses $20K For The First Time. Is This Rally A Repeat Of 2017?
Bitcoin hit a new all-time on Wednesday, topping the $20,000 level for the first time and sending the Grayscale Bitcoin Trust (OTC:GBTC) higher by 8.1%.
Bitcoin flirted with its 2017 highs of $19,850 a couple of weeks ago before pulling back. The popular cryptocurrency took out those levels on Wednesday and was trading at around $20,523 in early morning trading.
Bitcoin prices bottomed at around $3,600 back in March but have since gained around 440%, making the cryptocurrency one of the best performing assets since the market recovery began. The 2020 rally has also finally made all the buyers during the 2017 bubble profitable on their trades.
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This Time It's Different: Nigel Green, founder and CEO of deVere Group, thinks this bitcoin rally is different than the one in 2017.
“Unlike previous surges, this time around, a major price driver seems to be fuelled by the flow of institutional investors, who are steadily increasing their exposure to Bitcoin and other cryptocurrencies,” Green said. “They’re being attracted by the good returns that the digital asset class is currently offering but, more importantly, by the huge future potential it offers.”
Another key driver of the bitcoin rally is concerns over the negative impact unprecedented government stimulus spending could have on the dollar. The SPDR Gold Trust (NYSE:GLD) has also rallied 21.9% in 2020 on inflation concerns.
Bitcoin investors appear to be on track for a very happy holiday season in 2020. Those that own the cryptocurrency are hoping 2021 plays out a lot better than 2018 did. The last time bitcoin made all-time highs in December 2017, its price crashed 68.3% the following year.
Benzinga’s Take: Stocks, bonds, real estate and even gold have long, well-established track records of investment performance, but bitcoin and other cryptocurrencies have only been around for a little over a decade.
A cryptocurrency’s supply is fixed, it doesn’t have the intrinsic value of a share of stock or a plot of real estate, and it doesn’t have the yield of a bond or certificate of deposit. Therefore, the prices of cryptocurrencies in the long term will be determined only by changes in long-term demand from investors and users.
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