TOKYO (Reuters) – Bitcoin traded at $ 33,365 in Asia Monday after climbing to a record high of $ 34,800 on Sunday as investors continue to bet the digital currency is on track to become a mainstream asset.
The latest milestone for the world’s most popular cryptocurrency came less than three weeks after it first crossed $ 20,000, on December 16, and bitcoin is now up about 800% since mid-March.
With bitcoin’s supply capped at 21 million, some see it as a hedge against inflation risk as governments and central banks turn on the stimulus taps in response to the COVID-19 pandemic. Some also consider it a safe haven during the COVID-19 pandemic, similar to gold.
“Part of it reflects fears of a weaker dollar,” said Bank of Singapore’s currency analyst Moh Siong Sim of the most recent rally.
“It seems that people prefer bitcoin as an expression of concern about currency devaluation compared to gold.”
Bitcoin’s advance also reflects growing expectations that it will become a mainstream payment method, with PayPal opening its network to cryptocurrencies.
The potential for quick gains has also drawn demand from larger US investors, as well as from traders who normally stick to stocks.
“The rally accelerated even more as insatiable investors continued to trade from home,” said Dave Chapman, executive director of Hong Kong-based digital equity firm BC Group.
Institutional investors see the potential for higher risk-adjusted returns compared to traditional investments, he said.
Bitcoin trades on numerous exchanges, one of the largest of which is Coinbase, and is preparing to go public to become the first major US cryptocurrency exchange to be listed on Wall Street.
Multiple competitor cryptocurrencies use similar blockchain or electronic ledger technology. Ethereum, the second largest, shot to 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