Bitcoin sets new 2020 high
13:32, 18 August 2020
Having tested, broken and then met resistance in the previous week, Bitcoin comfortably surpassed the key psychological benchmark of $12,000 on Sunday.
Rising by more than 4 per cent, the world’s largest cryptocurrency reached $12,485, its highest level in 2020 thus far.
Between May and late July, Bitcoin experienced a period of relatively low price volatility, hovering above $9,000 and sometimes testing $10,000. In the past month, however, BTC has surged significantly, rising by more than 30 per cent.
The enthusiasm for cryptocurrencies powered by the ongoing Decentralised Finance (DeFi) boom can also be said to have spilled over into Bitcoin, playing a part in the gains of the past month. The total value locked into DeFi is now more than $6.4bn, having stood below $2bn only months before.
Notwithstanding this surge of interest, Bitcoin’s gains can be attributed to wider macroeconomic trends.
With Covid-19 uncertainty continuing to weigh on the global economy, investors have searched for safe havens. Gold has consequently risen to all-time highs, while BTC has proved an attractive digital alternative.
The fact that Bitcoin plunged at the height of the market volatility in March, dented in the eyes of some its claim to be a trustworthy store of value. However, in the succeeding months, the crypto has gone from strength to strength, receiving increasing support from institutional investors.
Only last week MicroStrategy, the world’s largest independent publicly traded business intelligence firm, bought $250m (£330m, €276m) worth of BTC, describing it as “a dependable store of value and an attractive investment asset”.
Should Bitcoin’s reputation as a reliable store of value separate from the inflationary tendencies of central banks, and nation states become even more recognised by financial institutions, then it could be heading far higher.
Only last week, legendary investor Jim Rogers said: "The next time we have a problem, and we are having it now, it is going to be the worst in my lifetime."
By mid-afternoon Tuesday (UTC), BTC traded at $12,219, 70.5 per cent higher than at the start of 2020.
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