Bitcoin breaches US$34,000 as rally extends into new year

Bitcoin advanced almost 50 per cent in December 2020, when it breached $20,000 for the first time.
Bitcoin advanced almost 50 per cent in December 2020, when it breached $20,000 for the first time.PHOTO: REUTERS

(BLOOMBERG) - Bitcoin, the world's largest cryptocurrency, topped US$34,000, just weeks after passing another major milestone.

The currency gained as much as 7.8 per cent to US$34,182.75, before slipping to about US$33,970 as of 3.05pm on Sunday in Singapore. It advanced almost 50 per cent in December, when it breached $20,000 for the first time.

The latest gains top an eye-popping rally for the controversial digital asset in 2020, which rebounded sharply after a severe crash in March that saw it lose 25 per cent amid the coronavirus pandemic.

The currency "will be on the road to $50,000 probably in the first quarter of 2021," said Antoni Trenchev, managing partner and co-founder of Nexo in London, which bills itself as the world's biggest crypto lender.

Institutional investors returning to their desks this week will likely boost prices further after retail buying over the holidays, he said.

Bitcoin has increasingly been "embraced in more global investment portfolios as holders expand beyond tech geeks and speculators", Bloomberg Intelligence commodity strategist Mike McGlone wrote in a note last month.

Proponents of the currency have also seized on the narrative that the coin could act as a store of wealth amid supposed rampant central-bank money printing, even as inflation remains mostly muted.

Bitcoin should eventually climb to about US$400,000, Scott Minerd, chief investment officer of Guggenheim Investments, told Bloomberg Television in a Dec 16 interview.

Still, there are reasons to be cautious, partly since Bitcoin remains a thinly traded market. The currency slumped as much as 14 per cent on Nov 26 amid warnings that the asset class was overdue a correction.

The big run-up in price in 2017 was followed by an 83 per cent rout that lasted a year.