Bitcoin topped $ 30,000 for the first time, extending a record rally that saw the cryptocurrency surge by over 300% last year.
As trading in traditional financial markets has yet to begin in 2021, bitcoin has resumed its vertiginous rise, up 18% in the first days of January to reach $ 34,000 on Sunday morning.
The rally fueled concerns that bitcoin is set to repeat the events of three years ago when a bull market crashed dramatically. When the currency hit a record high in November, economist Nouriel Roubini called it is “a pure speculative asset and a bubble without fundamental value”.
But some analysts have pointed to an increase in corporate and institutional interest in bitcoin. Well-known investors such as Paul Tudor Jones and Stanley Druckenmiller threw their weight behind him, and crypto-focused hedge funds have eclipse peers.
Recent gains have far exceeded traditional asset classes. Bitcoin rose 305% last year, compared to the 16% increase in the blue-chip S&P 500 Wall Street index and the 25% rally in gold.
“Despite the rise in prices and valuations, we believe the conditions remain in place for a continued recovery,” Fundstrat analysts said in late December.
They also cited a clearer approach to the industry from U.S. regulators and the possibility that the latest fiscal stimulus package approved by Congress could fuel retail demand.
Bitcoin’s frenzied rally has been aided by signs that cryptocurrency is increasingly integrated into the financial system. In October, PayPal said US customers would have the option to keep bitcoins in their digital wallets. In December, crypto exchange Coinbase deposit with regulators to go public.