LONDON: Bitcoin passed $17,000 on Tuesday to touch its highest level this year, with investors saying the gains are based on demand for the cryptocurrency’s perceived inflation-resistant qualities and expectations of wider mainstream acceptance.
The original and biggest cryptocurrency climbed 3.6 percent to $17,325, its highest level since January, 2018 — just after the peak of its 2017 bubble.
Bitcoin has soared over 130 percent this year, and is up more than four-fold from its March lows.
Its all-time high is $19,666, scaled in December, 2017 on the back of retail investor-fuelled buying frenzy.
Other major cryptocurrencies including ethereum and XRP, which often move in tandem with bitcoin, climbed between
2 and 4 percent.
Powering bitcoin’s 2020 rally has been strong appetite for riskier assets in the wake of government and central bank stimulus measures to combat the COVID-19 pandemic, and a growing attraction to its purported inflation-proof qualities.
Investors such as family offices, which manage money on behalf of wealthy individuals, have sought out the cryptocurrency as a hedge against any future inflation that stems from central bank stimulus measures, analysts said.
Bitcoin’s supply is capped at 21 million. Proponents say its scarcity provides an innate value and shields it from central bank or government policies that stoke inflation.
“The virus crisis is propagating the reassessment of bitcoin,” said Nikolaos Panigirtzoglou, an analyst at JPMorgan. “There is a reassessment about its value here as an alternative currency, as an alternative to gold.”