Another day, another $1,000-plus increase in bitcoin’s price, bringing the leading cryptocurrency’s combined gains this new year to about $5,000.
- The price of bitcoin surged past $34,000 for the first time ever early Sunday morning Eastern time, extending a record-setting holiday rally and adding an immediate exclamation point to the Bitcoin Network’s 12-year anniversary.
- Once the price of the leading cryptocurrency crossed the $30,000 mark for the first time Saturday – something it had struggled to do for the previous couple of days – it seemed all resistance vanished, rising more than $3,000 in about seven hours and reaching a new all-time high of $33,136.92, before settling down to fluctuate between $30,000 to $33,000.
- “Bitcoin makes TSLA [Tesla] look like it is standing still,” tweeted Jim Bianco, well-known macro strategist, when the cryptocurrency broke $30,000.
- Then, Saturday evening, bitcoin resumed its climb, setting a new all-time high of $34,544.94 shortly into Day 3 of the new year, before giving back some gains, recently trading at $34,295.11, up 15.09% in the last 24 hours.
- It’s a wild start to 2021 and follows a landmark year in which the cryptocurrency rose more than 300%, with an almost 50% gain in December alone. On Nov. 30, bitcoin breached a nearly three-year-old high of $19,793. By the close of Dec. 31, the cryptocurrency had risen about $10,000.
- Into the third day of 2021, the price of bitcoin has risen about $5,000, bringing its year-to-date return to about 12%.
- Propelling the record-setting run is a growing narrative that bitcoin represents a form of “digital gold,” and bringing with it a flood of institutional investors into the cryptocurrency. Among them: Anthony Scaramucci’s Skybridge Capital ($182 million in December); insurance giant MassMutual ($100 million in December); and Guggenheim Investments (up to 10% of its $5 billion macro fund).
- “Bitcoin’s price is being driven by institutional money and there is not enough supply,” Laurent Kssis, managing director at 21Shares, told CoinDesk. “The number of family offices asking to invest in our [exchange-traded product] is just staggering. I’ve never seen this before. In 2017 it was just retail knocking at the door. Now it’s only institutional.”
- Kssis’ statements are buttressed by the fact that the number of whale entities – clusters of crypto wallet addresses held by a single network participant holding at least 1,000 BTC – rose to a new record high of 1,994 this past Wednesday.
- The metric increased by over 16% in 2020 and 7.3% in Q4 alone.
- “The final land grab has started, and by this time next year, accumulating >1,000 bitcoin will be nearly impossible for most people,” Jehan Chu, CEO at Hong Kong-based trading firm Kenetic Capital, told CoinDesk.
Bitcoin’s rise could also be explained by worries over the dollar while Congress spends more trillions we don’t have at a time when much of the economy is effectively shuttered.
Of course, it could also be a bubble.