The most popular cryptocurrency, bitcoin (BTC) hit USD 50,000 three times in less than 24 hours and on the third attempt it surpassed USD 51,000 before correcting lower. (Updated at 08:50 UTC with the latest market data. Updated at 10:36 UTC with the latest market data and comment from JPMorgan.)
At the time of writing (10:34 UTC), BTC trades at USD 51,444, correcting from its new all-time high of USD 51,616, per Coingecko.com data. The price is up by 5% in a day and 11% in a week. It increased its monthly gains to 45% and rallied by 418% in a year.
BTC price chart:
“There are a number of reasons why bitcoin is soaring, but what stands out most is the trend that MicroStrategy started and Tesla popularized: moving institutional balance sheets into bitcoin to hedge against inflation,” Nicholas Pelecanos, Head of Trading at NEM, said in an emailed comment.
According to him, this is just the start of a trend that could see billions of dollars flow into the crypto space over the course of 2021 — all at a time when the supply is becoming extremely squeezed.
“The total amount of bitcoin on exchanges has reduced by a third-year on year, which means the upside moves will continue to be aggressive. USD 50,000 is euphoric, but I wouldn’t be surprised if the price doubled again within a year,” Pelecanos said.
Meanwhile, Rob Levy, Co-founder and President of Hxro, a crypto derivatives trading platform, this bull market is different.
“This is not a speculative, retail-driven mania. On the contrary, this is very much institutionally driven. It is no coincidence that it comes on a day that MicroStrategy announces another USD 600m debt offering which will be used to buy more bitcoin. True institutional adoption is accelerating at a remarkable place. That is more important than arbitrary price levels in USD,” he said.
However, bitcoin’s volatility needs to ease to prevent the rally from fizzling and the current price “looks unsustainable,” JPMorgan Chase & Co strategist wrote in a note Tuesday, as reported by Bloomberg. According to them, the BTC prices this year “appear to have been more influenced by speculative flows.”