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Bitcoin Rallies as Bulls Load Up on Bets for Surge Above $20K

Bitcoin neared a three-year high Wednesday, sparking bets the months-long bull run could see the popular crypto sail past its $20,000 rally seen three years ago.

Bitcoin rose 6.46% to $17,764, a level not seen since December 2017.

Some have attributed the latest rally to signs that new money from the sidelines is finding its way into the cryptos.

"The network effect has taken over. I see tons of new buyers and there is very little supply," said investor Mike Novogratz.

Adding credence to Novogratz's claim, bitcoin's market cap, often used to gauge demand, has jumped to $329 billion, up from $298.13 billion last week.

As well as the retail investor base, which has been a mainstay for the popular crypto, the increased attention from Wall Street recently has given bitcoin a shot in the arm amid increased demand to hedge against currency debasement.

"Demand for bitcoin from financial advisors and their clients has accelerated due to current trends, including the growth in investment demand from millennials and institutional investors, bitcoin’s potential as an inflation hedge in response to monetary stimulus and the asymmetric upside of the investment," Eaglebrook Advisors said in a note.

Still, there are others who cast doubt on bitcoin's inflation protection ability versus gold.

"I don't think digital currencies will succeed in the way people hope they would for those reasons … I wouldn't prefer bitcoin to gold," Bridgewater Associates founder and chief investment officer Ray Dalio said. "Gold will be the vehicle that central banks and countries use as an alternative to cash."

As well as fresh funds entering cryptos, bitcoin's "halvening" in May - an event roughly every four years that halves the number of bitcoins in circulation – also played a role in the latest rally.

Halvening events in both 2012, and 2016 had preceded previous bull runs for popular crypto.

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