Bitcoin has come within touching distance of a new record high as investors look to the imminent arrival of $1,400 stimulus cheques in the US, with sentiment also helped by an NFT (non-fungible token) by artist Beeple selling for £50million at auction.
The world’s most famous cryptocurrency went almost level to its all-time high of $58,354 overnight, although it has now fallen back a little to trade at around $56,000.
Bitcoin’s latest surge in value is part of a uphill trend that has seen it rise 20 per cent in the past week and over 750 per cent since last year amid rising interest from institutional investors and big names like Elon Musk, who last month bought $1.5billion of the cryptocurrency.
Uphill trend: Bitcoin has risen more than 750% over the past twelve months
At the start of 2020, Bitcoin traded at just over $7,000, while a decade ago, you could buy it for just 7p.
But it has been on a rise of late, with analysts generally putting the stratospheric rise down to the cryptocurrency being increasingly seen as a sort of ‘digital gold’ – or a hedge against a potential devaluation of major world currencies because of money printing by central banks in response to the pandemic.
A third relief Covid package worth $1.9trillion signed by President Joe Biden yesterday, which will shortly see cheques sent out to Americans, could push Bitcoin value higher, according to some analysts, a
Under the new package, any American earning less than $75,000 per year will receive a cheque for $1,400.
Naeem Aslam, chief market analyst at Ava Trade, believes some of the cheques money may end up in Bitcoin and NFTs.
‘The US stimulus checks will allow retail traders to park some portion of their funds in Bitcoin,’ he said.
‘Given that buying Bitcoin has become a lot easier now, and more companies are involved in this space, we believe another massive rally is strongly on Bitcoin’s horizon.’
More stimulus: US President Joe Biden has passed a third relief Covid package worth $1.9tr
Aslam noted that last time the US passed a Covid relief bill in December, stock markets experienced a lot of volatility, but this time he expects it to be ‘on a much larger scale’, pushing investors to pile money into the likes of Bitcoin.
‘The chances are half of this stimulus check money will be heading towards the stock market, or it could be even more as some retail traders are looking for a bigger bang for their buck,’ he said.
‘It is highly likely that we will see another episode of stock volatility that we experienced back in December. But this time, it could be on a much larger scale. Americans are likely to get their checks from next week.
‘Stock volatility isn’t the thing that we may see; these retail traders will likely follow pretty much anything that is hyped over the internet.’
Simon Peters, an analyst at multi-asset investment platform eToro, said: ‘The announcement from the White House is very significant for risk assets in general, and cryptoassets specifically.
‘The $1.9trn stimulus package is already boosting bitcoin and peers, and with the floodgates now open in terms of new liquidity for the market, we expect fresh record highs to be set for the major cryptoassets in short order.’
He added: ‘It is widely accepted that a wave of institutional investors have started investing into bitcoin alongside the growing cohort of retail investors who already own it.
‘With that kind of driver to demand, and supply limited, it bodes well for future prices. More and more investors are looking to diversify their portfolios away from traditional investments, which are increasingly correlated with each other, with alternative assets.’