Bitcoin broke above the $20,000 level for the first time in history on Wednesday while crypto enthusiasts emphasized an increased demand from institutional-sector investors for the hottest digital currency in the world, according to Coindesk ratings.
Bitcoin breaks through $20,000 level for first time ever
The most valuable virtual currency in the world has traded 7.54% higher, to a price of roughly $20,700, according to Coindesk, putting its year-to-date gains at more than 180%. And as of writing, it's still rising.
The surge happened just after 8:00 AM EST, when the price of Bitcoin by market capital hit $20,637.18 — according to a press release from deVere Group, one of the world's largest independent financial advisory and fintech organizations, shared with Interesting Engineering (IE) via email.
A mere two weeks ago, reports said Bitcoin nearly hit the all-time high of $19,850 — which occurred in 2017.
New Bitcoin record due to institutional investors
"We've been saying for a few months now that Bitcoin is likely to surpass its previous all-time high before the end of this year — and now it has," said CEO and Founder of deVere Nigel Green, in the release shared with IE via email. "Since the cryptocurrency's March lows of $3,600, it is up 440%, making it one of the best-performing assets of the year."
"Many investors and crypto advocates will be extremely glad that they kept their Bitcoin and didn't sell," added Green. "Unlike previous surges, this time around, a major price driver seems to be fueled by the flow of institutional investors, who are steadily increasing their exposure to Bitcoin and other cryptocurrencies."
Major investors moving portfolios into bitcoin
Like some sectors of the economy, Bitcoin has had an exceptional year. Analysts say the currency has received a boost from major investors like Stanley Druckenmiller and Paul Tudor Jones — who moved their assets into cryptocurrency — while tech firms like MicroStrategy and Square have implemented balance sheets to buy bitcoin, CNBC reports.
"This is the domino effect as asset managers tumble their portfolios into bitcoin," said Charles Hayter, CEO of crypto market data provider CryptoCompare, to CNBC.
Wall Street firms made big push into crypto market data
Bitcoin's last record high reminded many cryptocurrency enthusiasts of its substantial surge to nearly $20,000 in 2017 — which preceded a sharp drop the following year, during which it closed at $3,000.
Proponents of crypto say the 2020 rally is different than 2017, since this rise is the result of institutional buying — rather than retail speculation.
Big Wall Street firms — including Cboe Global Markets and S&P Global — have made a big push into crypto market data services. Cboe has tapped Coinroutes' crypto market data capabilities, a New York-based software company — while S&P Dow Jones Indices recently announced aims to launch new crypto indices starting 2021.
Investors, like wider economy, embracing digital realities
U.K. asset manager Ruffer updated clients regarding a "new allocation" to bitcoin, announcing it had roughly 2.5% of its portfolio invested in bitcoin. "We see this as a small but potent insurance policy against the continuing devaluation of the world's major currencies," said the company, CNBC reports.
"Bitcoin diversifies the company's (much larger) investments in gold and inflation-linked bonds, and acts as a hedge to some of the monetary and market risks that we see." As of November's end, Ruffer managed roughly $27.4 billion in assets.
With the pivot of much of the world's economy to remote and virtual networks from quarantines related to the COVID-19 pandemic, it seems traditional market drivers like institutional investors have also allocated serious portfolio resources into Bitcoin this year — resulting in what could be a sustainable new rise in cryptocurrency price. Whether for or against digital currencies, those who didn't abandon their investments since 2017 are probably thanking themselves as 2020 comes to a close.