LONDON: Bitcoin homed in on its all-time high on Tuesday after hitting $19,000 for the first time in nearly three years. The world's most popular cryptocurrency was last up 3% at $18,918, near its all-time record of $19,666. Bitcoin has gained almost 40% in November alone and is up around 160% this year.
Fuelling its blistering rally had been demand for riskier assets amid unprecedented fiscal and monetary stimulus designed to counter the economic damage of the COVID-19 pandemic, hunger for assets perceived as resistant to inflation and expectations that cryptocurrencies will win mainstream acceptance.
Bitcoin's 12-year history has been peppered with vertiginous gains and equally sharp drops. Its markets remain highly opaque compared with traditional assets such as stocks or bonds. Its rally this year has prompted some investors to claim the cryptocurrency could more than quintuple in price to as high as $100,000 in a year, drawing eye rolls from sceptics who say it is a purely speculative asset.
"The latest run in bitcoin... has been fuelled by the lack of supply-side liquidity, especially on exchanges," said Jacob Skaaning of crypto hedge fund ARK36, adding that the volume of bitcoin on trading platforms was down amid high demand. Cryptocurrency markets have matured since bitcoin's retail-fuelled rally in 2017, attracting bigger investors.
James Butterfill of digital asset manager CoinShares said growing activity in bitcoin derivatives markets "implies that sophisticated investors and institutional investors are now purchasing bitcoin." Smaller digital currencies, which often move in tandem with bitcoin, took a breather after gaining sharply in recent days.
Ethereum, the second largest cryptocurrency, was down slightly after hitting its highest since June 2018 on Monday ahead of an upgrade to its blockchain network that is expected to make it quicker and attract more users. The third-largest, XRP, gained 2%, turning positive after soaring almost 40% on Monday to its highest in 2-1/2 years.
Smaller digital coins soar
Ethereum jumped to highest since June 2018 as traders cite upcoming blockchain upgrade XRP gained 75% over three days. Digital currencies Ethereum and XRP soared on Monday, gaining momentum as bitcoin powered on towards its all-time high.
Ethereum, the second largest cryptocurrency by market capitalisation after bitcoin, jumped 7% to its highest since June 2018, taking its gains to more than 25% over the last three days alone.Traders said ethereum, which often moves in tandem with bitcoin, has been boosted by growing demand ahead of an upgrade to its blockchain network - due in early December - that is widely expected to make it quicker and more secure.
Third-biggest coin XRP soared 15% to its highest in two years, taking gains to more than 75% over the last three days. Traders said there was no immediate news catalyst for its jump on Monday. The price of these so-called altcoins is closely tied to bitcoin. Less liquid than their bigger cousin, they tend to suffer from even greater volatility than the original cryptocurrency.
