TOKYO / LONDON (Reuters) – Bitcoin jumped more than 5% to new all-time highs of $ 41,530 on Friday, reversing losses from earlier in the session.
The world’s most popular digital currency fell to $ 36,618.36 on Bitstamp exchange before returning. Rival cryptocurrency ethereum was up 3% after a decline of more than 10%.
Bitcoin is up nearly 1,000% since a low in March. It first reached $ 30,000 on January 2, after surpassing $ 20,000 on December 16.
Some market participants had warned of a correction after the $ 40,000 milestone was reached, but bitcoin was about to register its 11th session of gains from the last 12.
Increased demand from institutional, corporate and more recently private investors has fueled bitcoin’s rise, attracted by the prospect of rapid profits in a world of ultra-low yields and negative interest rates.
“We see a continued spike in demand, driven largely by continued and unprecedented institutional interest, showing no signs of slowing down as we move into 2021,” said Frank Spiteri of Digital Asset Manager CoinShares.
JPMorgan strategists wrote on Jan. 5 that the digital currency has emerged as a rival to gold and could trade as high as $ 146,000 if it establishes itself as a safe haven.
Interest in the world’s largest cryptocurrency soared last year, with investors seeing bitcoin as a hedge against inflation and an alternative to the depreciating dollar.
Bank of America investment strategists said Friday that “violent” inflationary price action in markets has helped bitcoin’s rally in the past two months.
But it warned that the cryptocurrency is “blowing out previous bubbles,” such as the dotcom bubble in the late 1990s, China in the 2000s, and gold in the 1970s.
Image: Bitcoin vs. inflation hedges
Image: Bubbly bitcoin
Reporting by Kevin Buckland and Thyagaraju Adinarayan, additional reporting by Tom Wilson; Edited by Himani Sarkar and Hugh Lawson