TOKYO (Reuters) – Bitcoin traded at $ 33,365 in Asia on Monday after rising to a record high of $ 34,800 on Sunday as investors still bet the digital currency is on the verge of becoming a mainstream asset.
The latest milestone for the world’s most popular cryptocurrency was less than three weeks after it first exceeded $ 20,000 on December 16, and bitcoin has now risen by about 800% since mid-March.
With the offer of bitcoin at 21 million, some see it as a hedge against the risk of inflation, as governments and central banks turn on the stimulus tap in response to the COVID-19 pandemic. Some even consider it a safe haven play during the COVID-19 pandemic, similar to gold.
“Some of it reflects fears of a weaker dollar,” Bank of Singapore currency analyst Moh Siong Sim said of the latest rally.
“People seem to prefer bitcoin as an expression of concern over the dismantling of currencies, compared to gold.”
The advance of Bitcoin also reflects growing expectations that it will become a common payment method, with PayPal opening its network for cryptocurrencies.
The potential for quick gains has also attracted demand from larger US investors, as well as from traders who normally stick to equities.
“The rally gained even more momentum as unsaturated investors continued to trade from home” during the New Year holidays, said Dave Chapman, CEO of BC Group, a digital asset industry.
Institutional investors see the potential for greater risk-adjusted returns compared to traditional investments, he said.
Bitcoin trades on numerous exchanges, of which Coinbase is one of the largest, preparing itself to become the public to become the first major US cryptocurrency exchange to be listed on Wall Street.
Several competing cryptocurrencies use similar technology for blockchain, or electronic ledger. Ethereum, the second largest, hit a record $ 1,014 on Sunday.
Reporting by Kevin Buckland; Additional reporting by Tom Westbrook and Alun John; Edited by Jacqueline Wong, Kenneth Maxwell and Raju Gopalakrishnan