Bitcoin is valued above $20,000 for the first time: Cryptocurrency has gained 170% in 2020 with investors predicting it will go mainstream
- Bitcoin’s value jumped more than 4.5 per cent to reach $20,440 on Wednesday
- Some investors believe the cryptocurrency could challenge gold as a safe haven
The value of Bitcoin smashed through $20,000 for the first time today, its highest ever, after enjoying a meteoric rise during 2020.
The cryptocurrency jumped more than 4.5 per cent to move as high as $20,440 on Wednesday, having gained more than 170 per cent this year.
Bitcoin’s value has been buoyed by hopes that it will become a mainstream payment method, especially after PayPal said it would allow its account holders to use it.
While Bitcoin is unregulated by any central bank, governments are eyeing up their own digital units in response to the growing popularity of cryptocurrencies and the dwindling global use of cash.
This chart shows the growth in Bitcoin’s value during 2020, a meteoric rise which saw it surpass $20,000 for the first time on Wednesday
Bitcoin’s value has been buoyed by hopes that it will become a mainstream payment method, especially after PayPal said it would allow its account holders to use it
Earlier this month, US investors Cameron and Tylor Winklevoss said Bitcoin could soar above $500,000 within 10 years and surpass gold as a store of value.
The twins, best known for their legal battle against Mark Zuckerberg over the founding of Facebook, suggested that Bitcoin could be ‘gold 2.0’.
‘Bitcoin is an emergent store of value that defends against inflation and has the potential to unseat gold,’ Cameron said.
‘This means it could appreciate 25x in value from $19K. No other liquid asset in the universe can credibly offer this magnitude of asymmetric payoff in the next decade.’
Tyler Winklevoss told CNBC: ‘Our thesis is that Bitcoin is gold 2.0, that it will disrupt gold… so we think it could price one day at $500,000 of Bitcoin.’
The rally in bitcoin, which some investors have seen as a potential safe-haven, has coincided with spot gold’s drop in recent months.
It has long been an attractive option for investors with an appetite for the exotic – although criminals have also seen its under-the-radar appeal.
US investors Tyler and Cameron Winklevoss (pictured in 2019) have said that bitcoin is on track to soar to $500,000 within the next 10 years and surpass gold as a store of value
After the unit surpassed $1,000 for the first time in 2013, it increasingly began to attract the attention of financial institutions and has experienced wild price swings.
Several central banks including those of China and Sweden – but also the US Federal Reserve – are testing digital applications in response to Facebook’s recent moves to produce its own digital unit, Libra.
In October, PayPal said it would allow customers to buy and sell using cryptocurrencies and to hold them in their online wallets.
Customers will also be able to use cryptocurrencies to shop at the 26million merchants on its network starting in early 2021.
Debate has meanwhile raged over the status of the digital asset, launched in late 2008, as to whether it should be seen as a form of money, an asset or a commodity.
Some investors such as hedge funds and family offices have in the past been deterred by the opaque nature of the crypto market.
Tightening oversight of the American crypto industry has helped soothe some of those concerns.
Bitcoin’s blistering rally has seen a massive flow of coin to North America from East Asia, fuelled by hunger for bitcoin among bigger and compliance-wary US investors.
Investors have also been attracted to its potential for quick gains and purported resistance to inflation.