Bitcoin surpassed $ 20,000 on Wednesday for the first time in its twelve-year history, as part of a furious rally that has seen the digital currency nearly triple this year.
According to CoinDesk, digital currency rose 9.3% to $ 21,240 after surpassing $ 21,448 intraday.
The move above $ 20,000 is the latest bullish sign for cryptocurrencies, which after years of trading on the sidelines are starting to be taken more seriously by professional investors.
A number of well-known investors and companies have publicly unveiled bitcoin holdings this year, including hedge fund managers Paul Tudor Jones and Stanley Druckenmiller, the insurance giant Massachusetts Mutual Life Insurance Co. and other companies, such as Square Inc.
and MicroStrategy Inc.
The record came after UK investment firm Ruffer Investment Management revealed it had about $ 744 million in bitcoins.
The $ 20,000 level “is a very symbolic threshold to reach at the end of what has been a historic year for bitcoin,” said Michael Sonnenshein, CEO of Grayscale Investments, which manages trust funds that invest in bitcoin and other cryptocurrencies. .
The grayscale has been a major beneficiary of the new wave of investors. Its assets under management this year have risen to more than $ 13 billion, from $ 2 billion earlier this year.
Bitcoin also attracts a new crowd of individual investors. Companies like Robinhood Markets Inc., Square, PayPal Holdings Inc.
and Webull have opened up cryptocurrency to their customers, making it easier for new investors to invest.
These new investors raise the price at least in part for the same reason other assets rise: the fall in the value of the US dollar. With the Federal Reserve lowering interest rates and indicating that it will allow inflation to heat up for years, investors are looking for alternative assets that can operate as hedging.
Bitcoin, for all its volatility, has been considered a hedge of the dollar by its followers, although this state has not yet been demonstrated. Its previous intraday high of $ 19,921 was set for Dec. 1, but it had been desperate for the past two weeks until this morning’s rise, which arrived around 8:30 a.m. ET.
The digital currency also hovered below $ 20,000 in 2017, but never surpassed the hump and eventually fell into a one-year bearish market.
Jean-Marie Mognetti, executive director of investment management firm CoinShares, said the cryptocurrency market has advanced since the last Bitcoin release to $ 20,000. The 2017 rally focused primarily on retail and infrastructure was unable to meet demand, he said.
“It simply came to our notice then. Every API was falling, every exchange was out of service, ”he added, noting that Bitcoin spent $ 20,000 without any problems on Wednesday.
So far this year, bitcoin has risen around 184%, which is well above the yields of most traditional assets. But in the cryptography industry, it’s not even the best performance. Ether, the Ethereum network’s own currency, rose about 360% in 2020 and rose 6% to $ 620 on Wednesday.
Price gains and the influx of new investors have fueled the interest of traditional exchange operators, who hope to introduce new markets for cryptocurrency-linked products to try to win business from institutional investors.
Giant exchange CME group Inc.
said Wednesday it was launching futures contracts on ether, the second-largest digital currency after Bitcoin. Futures are derivative contracts that track other markets ranging from oil to wheat to the S&P 500. Traders will be able to use CME ether futures to bet on anticipated increases or decreases in digital currency or protect against adverse price movements.
CME’s ether contracts are expected to begin trading in February, pending regulatory review. The announcement comes nearly three years after the Chicago-based stock market giant began trading in bitcoin futures, a launch that reached the peak of bitcoin’s 2017 frenzy. Ether would be only the second cryptocurrency to have a futures contract at CME.
Earlier this week, Cboe Global Markets, CME’s rival, took over the city Inc.
he also indicated that he was dipping his finger back into cryptocurrencies, an investment after he abandoned his own bitcoin futures contract last year. Cboe said it partnered with CoinRoutes, a software company that offers digital asset trading tools, to disseminate data on cryptocurrency markets to Cboe customers.
—Alexander Osipovich contributed to this article.
In an original WSJ documentary, market journalist Steven Russolillo ventures into Japan and Hong Kong to explore the world of cryptocurrencies. Its mission: to create WSJCoin, a virtual witness for the newspaper industry. Image: Crystal Tai. Video: Clément Bürge
Write to Paul Vigna to [email protected]
Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8