Topline
Less than three years after crypto markets notoriously crashed, the price of bitcoin has proved resurgent, eclipsing its all-time high from December 2017 on Monday as the world's first cryptocurrency soars amid global inflation concerns sparked by heightened government spending during the pandemic.
Bitcoin logo displayed on a smartphone.
Key Facts
Shortly after 10 a.m. Eastern, the price of bitcoin reached as much as $19,850–eclipsing an all-time high of $19,783 from December 2017, according to the CoinDesk Bitcoin Price Index, which provides the average price of bitcoin across several leading global exchanges.
Within minutes, the price fell back to about $19,500, but bitcoin is still up roughly 7% in the last 24 hours, boosting year-to-date gains to about 170%.
Bitcoin’s rally this year has been fueled by investors flocking to cryptocurrencies as a hedge against longer-term inflation concerns, which have heightened as a result of large-scale government stimulus packages, Nigel Green, the CEO of $12 billion wealth advisory DeVere Group, said earlier this month.
Meanwhile, the price of the U.S. dollar relative to other government-backed currencies has tanked to its lowest point in two and a half years.
Crucial Quote
“The significance of a new all-time high in dollar terms can’t be understated,” Kevin Kelly, cofounder of Delphi Digital and a former Bloomberg equity analyst, told CoinDesk on Monday. “Many skeptics have publicly denounced bitcoin for failing to reach a new high despite such a favorable macro backdrop so this is yet another testament to bitcoin’s staying power.”
Key Background
Despite ongoing regulatory uncertainty, institutional investors and corporations have warmed up to bitcoin this year as a means for portfolio diversification and massive sales growth. Last quarter, Square’s CashApp made more than $1.6 billion from bitcoin trading–11 times what it made in the third quarter of 2019 and good enough to boost total revenue growth to 140% year over year. In October, the payments company, which launched crypto trading in 2018, invested $50 million in bitcoin to beef up its largely USD-denominated balance sheet, and through the first half of 2020, more than 20 financial institutions revealed they owned bitcoin via the Grayscale Bitcoin Trust. Just this month, PayPal began allowing customers to buy, hold and sell cryptocurrency on its platform, and perhaps most importantly, users will be able to use their crypto holdings to pay at the firm’s 26 million merchants starting next year. “The migration toward digital payments and digital representations of value continues to accelerate, driven by the Covid-19 pandemic and the increased interest in digital currencies from central banks and consumers,” the firm said when it announced the move last month.
Tangent
Before crashing 80% by the end of 2018, the price of bitcoin, which first launched in January 2009, climbed 15-fold in 2017 amid a flood of heightened attention and surging mainstream adoption, as retail trading became easier through pioneering bitcoin platforms like brokerage Coinbase.
Surprising Fact
DeVere Group says that 73% of its millionaire clients who responded to a recent poll are already invested in or will invest in cryptocurrencies by 2023, up from 68% last year–a sign high-net-worth individuals are rebalancing their portfolios toward crypto, Green said.
Further Reading
Bitcoin, Ethereum, Ripple’s XRP, Litecoin And Chainlink Suddenly Bounce Back (Forbes)
Some Are Calling All-Time Highs for Bitcoin. Here’s Why CoinDesk Hasn’t Yet (CoinDesk)
