For the first time on Thursday, Bitcoin topped $40,000, as it continues a surge that has seen the digital currency climb more than 700 percent from a closing low on March 12.
This year, increased demand from institutional, corporate, and more recent retail investors has fueled the rise of bitcoin, attracted by the promise of rapid growth in a world of ultra-low returns and negative interest rates.
The most successful cryptocurrency in the world rose to $40,402.46 and was last up 6.1% at $39,100. On Jan. 2, it passed $30,000 for the first time, and on Dec. 16, it crossed $20,000.
The second-largest in terms of market capitalization, the smaller coins ethereum, and XRP, the fourth-largest, rose 1.8 percent at $1,231 and 31 percent at 32 U.S. cents, respectively. Both currencies also travel with Bitcoin in tandem.
Amid enormous monetary stimulus aimed at fighting the economic destruction caused by COVID-19, some investors perceived bitcoin as a shield against inflation.
However, market observers cautioned that a correction could be in the cards after a scorching rally.
“While further growth is inevitable, investors should not expect this to move in a straight line,” said Gavin Smith, chief executive officer of cryptocurrency consortium, Panxora Group.
“The reality is that bitcoin is far from being a magic money tree, nor is it free from downward price swings. In fact, we can expect dips as sharp as 25% at times as investors periodically withdraw profits,” he added.
According to data trackers CoinMarketCap and CoinGecko, the Bitcoin boom occurred as the market cap for the entire cryptocurrency industry topped $1 trillion on Thursday.
Glassnode, which offers insight into blockchain data, noted that over the last few weeks, retail interest in bitcoin has risen, with the number of bitcoin addresses or wallets holding a virtual currency’ non-zero-sum’ hitting an all-time high of more than 33 million.
Although interest in bitcoin and news coverage has risen, the data provider has said it is far from being in bubble territory. The number of new daily bitcoins has not yet reached 2017 levels, Glassnode said, indicating that the currency is experiencing solid organic adoption growth, but not the kind of “viral growth typical of a bubble.”
Source: Reuters
