Bitcoin traded at $33,365 (roughly Rs 24.3 lakhs) in Asia on Monday, after soaring to a record high of $34,800 (roughly Rs 25.4 lakhs) on Sunday. The latest milestone for the world's most popular cryptocurrency comes within three weeks of crossing $20,000 (roughly Rs 14.6 lakhs) for the first time on December 16, 2020. Bitcoin has now surged around 800 per cent since mid-March.
The surge in December 2020 caused an outage in Coinbase, a major US cryptocurrency exchange. Its retail and professional focused platforms were hit by connection problems. Coinbase is now preparing to go public to become the first major US cryptocurrency exchange to list on Wall Street.
Traders and investors expect bitcoin to become a mainstream payment method with PayPal opening its network to cryptocurrencies. In addition to the expectations that bitcoin would become a mainstream payment method, the currency has seen a growing demand for large US investors attracted by its perceived inflation-hedging qualities and potential for quick gains.
"Some of it is reflecting the fear of a weaker dollar," Bank of Singapore currency analyst Moh Siong Sim said of the most recent rally. "It seems like people are preferring bitcoin as an expression of concern over currency debasement, relative to gold."
With bitcoin's supply capped at 21 million, some see it as a hedge against the risk of inflation as governments and central banks turn on the stimulus taps in response to the COVID-19 pandemic, Reuters reported. Some investors also view it as a safe-haven play during the COVID-19 pandemic, akin to gold. Bitcoin posted an average daily move of 2.7 per cent in 2020, according to Bloomberg. By comparison, the price of gold saw swings of 0.9 per cent.
Analysts anticipate bitcoin to eventually pass $100,000 per coin. "It's very likely that the asset will eventually pass $100,000 per coin," Sergey Nazarov, cofounder of Chainlink, a global blockchain project, wrote in an email. Multiple competitor cryptocurrencies use similar blockchain, or electronic ledger, technology. Ethereum, the second biggest, shot to a record $1,014 (roughly Rs 74,100) on Sunday