Bitcoin breaches $34,000 as rally extends into New Year

Bitcoin, the world’s largest cryptocurrency, topped $34,000, just weeks after passing another major milestone.

Bitcoin has a great start this year (REUTERS)

The currency gained as much as 7.8% to $34,182.75, before slipping to about $33,970 as of 3:05 p.m. on Sunday in Singapore. It advanced almost 50% in December, when it breached $20,000 for the first time.

The latest gains top an eye-popping rally for the controversial digital asset in 2020, which rebounded sharply after a severe crash in March that saw it lose 25% amid the coronavirus pandemic.

The currency “will be on the road to $50,000 probably in the first quarter of 2021,” said Antoni Trenchev, managing partner and co-founder of Nexo in London, which bills itself as the world's biggest crypto lender. Institutional investors returning to their desks this week will likely boost prices further after retail buying over the holidays, he said.

Bitcoin has increasingly been “embraced in more global investment portfolios as holders expand beyond tech geeks and speculators,” Bloomberg Intelligence commodity strategist Mike McGlone wrote in a note last month. Proponents of the currency have also seized on the narrative that the coin could act as a store of wealth amid supposed rampant central-bank money printing, even as inflation remains mostly muted.

Bitcoin should eventually climb to about $400,000, Scott Minerd, chief investment officer of Guggenheim Investments, told Bloomberg Television in a Dec. 16 interview.

Still, there are reasons to be cautious, partly since Bitcoin remains a thinly traded market. The currency slumped as much as 14% on Nov. 26 amid warnings that the asset class was overdue a correction. The big run-up in price in 2017 was followed by an 83% rout that lasted a year.

By Alice Gledhill