Bitcoin hits new record, now with less talk of cryptocurrency bubble

Bitcoin is back. Again. Nearly three years after it went on a hair-bending rise and hit a peak of $19,783, the price of a single Bitcoin rose above that for the first time Monday, according to data and news provider CoinDesk. The cryptocurrency has soared since March, after sinking below $ 4,000 at the outset of the coronavirus pandemic.

Bitcoin’s latest climb is different from its previous spike in 2017, which was driven largely by investors in Asia who had just learned about cryptocurrencies. Back then, the digital token soon lost momentum as people questioned what it could do other than allow for easy online speculating and drug and ransom payments.

While those questions remain, Bitcoin is now being fueled by a less speculative fever. Buyers — led by American investors, including companies and other traditional investors — are treating Bitcoin as an alternative asset, somewhat like gold, according to an analysis from data firm Chainalysis. Rather than quickly trading in and out of it, more investors are using Bitcoin as a place to park part of their investment portfolios outside the influence of governments and the traditional financial system, Chainalysis and other industry firms said.

“It’s a very different set of people who are buying Bitcoin recently,” said Philip Gradwell, chief economist at Chainalysis, which analyzes the movement of cryptocurrencies. “They are doing it in steadier amounts over sustained periods of time, and they are taking it off exchanges and holding it as an investment.”

The excitement has been underpinned by regulators and mainstream financial companies that are trying to make cryptocurrencies safer and more accessible.

The Office of the Comptroller of the Currency, a U.S. regulator, said this summer that banks would be allowed to hold cryptocurrencies for customers. And Pay Pal announced in October it would follow its rival Square and allow people to buy and hold Bitcoin and a few other cryptocurrencies.

“Our move came as a result of conversations with government officials, and then seeing the dramatic shift into digital payments as a result of the pandemic,” Dan Schulman, chief executive of PayPal, said. More than 1 million people joined a waitlist to use cryptocurrencies before the feature was started, he said.