Bitcoin tops $40,000 as investors seek hedge against inflation
Bitcoin has surged above the $40,000 (£29,500) mark for the first time in its history after doubling its value in less than a month.
The record comes just days after the cryptocurrency hit an all-time high of more than $34,800 on Sunday, which was also the 12th anniversary of the bitcoin network being created. Bitcoin first breached the $20,000 mark in mid-December.
The asset has become increasingly popular with mainstream institutional investor, and supporters argue that it is starting to supplant gold as a store of value.
Analysts at the US investment bank JP Morgan said this week that bitcoin could eventually hit $146,000 if it bolsters its reputation as an alternative to the precious metal. They said the cryptocurrency was also becoming an option for investors who were looking to hedge against inflation, but were turned off by the depreciating US dollar.
There are more than 18m bitcoins in existence, created by the “miners” who provide the computational power underpinning the blockchain. The blockchain is a decentralised record of all transactions made using bitcoin that is maintained by a network of thousands of computers around the world. The system has a hardwired maximum of 21m coins.
Some sceptics have warned that the cryptoboom could be heading for trouble, and that the coin itself has no intrinsic value. But Naeem Aslam, the chief market analyst at AvaTrade, an online broker, said the cryptocurrency continued to defy its critics.
“A major price level has been hit and bitcoin has proved that this is not the asset class you want to mess around with. It has proved itself to all disbelievers today.
“Institutional traders are the ones who have really got the rally going”, he said, adding that the next major moment for the cryptocurrency would come when it breached the $50,000 mark.