TOKYO / LONDON (Reuters) – Bitcoin jumped more than 5% on Friday to new records of $ 41,530, reversing the losses from the start of the session.
The world’s most popular digital currency dropped to $ 36,618.36 on the Bitstamp exchange before recovering. The rival cryptocurrency ether has increased 3% after sinking more than 10%.
Bitcoin has risen almost 1,000% since the March low. It reached $ 30,000 for the first time on January 2, after exceeding $ 20,000 on December 16.
Some market participants have warned of a correction after the $ 40,000 milestone has been reached, but bitcoin was about to register its 11th earnings session among the last 12.
Rising demand from institutional, corporate and, more recently, retail investors has driven the rise of bitcoin, attracted by the prospect of rapid gains in a world of ultra-low yields and negative interest rates.
“We are seeing a steady increase in demand driven largely by sustained and unprecedented institutional interest, showing no sign of abating as we move into 2021,” said Frank Spiteri, digital assets manager CoinShares.
JPMorgan strategists wrote on January 5 that the digital currency has emerged as a rival to gold and can trade for up to $ 146,000 if it is established as a safe-haven asset.
Interest in the world’s largest cryptocurrency skyrocketed last year, with investors viewing bitcoin as a hedge against inflation and an alternative to the dollar’s devaluation.
Bank of America investment strategists said on Friday that the “violent” action of inflationary prices in the markets has helped bitcoin’s recovery in the past two months.
But he warned that the cryptocurrency “explodes the previous bubbles”, like the dot-com bubble in the late 1990s, China in the 2000s and gold in the 1970s.
Chart: Bitcoin vs. inflation hedges
Graphic: Bubbly Bitcoin
Reporting by Kevin Buckland and Thyagaraju Adinarayan, additional reporting by Tom Wilson; Editing by Himani Sarkar and Hugh Lawson