Bitcoin taking shine off gold

CRYPTO HIGHS AMID INFLATION FEARS

CRYPTOCURRENCY Bitcoin flew to a three-week high of $66,357 yesterday as investors sought protection against the rising threat of inflation.

Its price is only just below its all-time high of $67,000 set on October 20, and takes the total crypto market above $3trillion.

Bitcoin is up more than 50% since the start of October, while popular crypto Ethereum jumped 58% to hit a fresh record of $4,768.

Reuters said Bitcoin has been riding “a wave of momentum, flows, favourable news and inflation fears”. Many see it as an alternative to gold.

Investors are piling in believing monetary stimulus programmes are fuelling inflation that will reduce the value of fiat money over time, said Hargreaves Lansdown analyst at Susannah Streeter. “Whereas Bitcoin has a fixed limit on the number of coins which can be created,” she added. Streeter said this “a highly risky strategy” given crypto volatility. She warned of a potential “mini sell-off ” if the US Federal Reserve and other central bankers taper stimulus programmes, such as bond purchases.

The Financial Conduct Authority recently warned 14% of UK crypto investors went into debt to invest. “This fresh rise risks taking more vulnerable consumers for a rollercoaster ride,” Streeter said.

Fawad Razaqzada, Thinkmarkets analyst, said demand was lifted by October’s launch of the Proshares Bitcoin Strategy exchange traded fund on the New York Stock Exchange, amid signs of US regulatory easing.

“With price pressures surging, Bitcoin and other cryptos are providing a costfriendly alternative to gold as a means of hedging against inflation,” he said.

RISKS Volatile market