Bitcoin is on a late December tear, topping off a Santa rally that’s seen it add around 50% since the week before Christmas.
The bitcoin price has climbed over 10% in the last 24 hours alone, with investors now eyeing the psychological $30,000 per bitcoin level for the first time. As a result, the combined value of all the bitcoin tokens in circulation has passed half a trillion dollars ($500 billion) for the first time.
“I think that the move here is extraordinary and could be viewed alternatively as being the only game in town during this period—with most of traditional finance away until mid to late January—or a bid to achieve the $500 billion market cap,” Thomas Kuhn, head of research and trading with Australian bitcoin and crypto exchange Mine Digital, said via Telegram.
“I would have a hard time bidding in here but if the timeline is longer than 12 months, it’s all value up to $1 trillion!”
After one high-profile bitcoin investor sold half of his bitcoin holdings this week, bitcoin and cryptocurrency traders asking where the mammoth bitcoin rally will end.
“The massive price increase of bitcoin during Christmas is mainly driven by retail traders as traditional markets are closed,” Marc Bernegger, bitcoin pioneer and member of the Board of Crypto Finance Group, said in emailed comments.
“I would not be surprised to see a healthy correction when these markets open on Monday. Compared to massive short term price gains of bitcoin in the past there are far more professional investors involved in the space today which will result in faster price corrections and decrease long term volatility.”
A growing number of big-name investors and Wall Street giants have named bitcoin as a potential inflation hedge this year, looking to protect themselves against a wave of inflation they see on the horizon as a result of unprecedented government spending in the wake of the coronavirus pandemic.
“There is no end in sight for money printing to stop which is propelling the bitcoin narrative,” CryptoCompare chief executive Charles Hayter said via email. “Funds are tumbling their portfolios into bitcoin and the herd is just starting to move.”
Last week, British fund manager Ruffer Investment Management pushed bitcoin over the $20,000 price level when it revealed it had bought $745 million worth of bitcoin, broadly taken as a sign of rising institutional interest.
“The triumvirate of institutions, regulators and retail are going to ensure volatility keeps its toe in the game,” Hayter added, pointing to CryptoCompare’s volatility index that’s “showing implied volatility is not dissipating.”
This week, the bitcoin and cryptocurrency community was rocked by news Ripple, the company behind the XRP digital token, was being sued by the U.S. Securities and Exchange Commission for illegally marketing XRP to retail customers.