Bitcoin surged to another new all-time high as institutions looked for alternatives to a weakening US dollar.
The cryptocurrency jumped 5% today to US$28,570, marking a near 50% gain since the start of December and a rise of almost four-fold in 2020 as investors have become increasingly concerned at the scale of COVID-19 rescue packages.
These have seen borrowings in the UK, US and Eurozone jump to levels not seen since wartime prompting fears about the security of so-called fiat currencies including the dollar, sterling and the euro.
Recent falls in the US dollar due to the US$900bn COID-19 support package agreed recently has hastened the switch into cryptocurrencies such as Bitcoin say traders and also gold, which has traditionally occupied the role as a hedging alternative to the dollar.
Moves by organisations such as payments giant Paypal to make dealing in cryptocurrencies easier has also boosted demand.
Paypal has reportedly bought around 70% of new Bitcoins in circulation.
Earlier in December, well-known fund manager Ruffer told investors that it had poured GBP550mln into Bitcoin, equivalent to around 2.7% of the funds under its management.
The fund said the decision was “primarily a defensive move”, made by reducing its exposure to the traditional haven asset of gold. Ruffer added that it saw the Bitcoin investment as a “small but potent insurance policy against the continuing devaluation of the world’s major currencies”.
Gold, meanwhile, has drifted since it briefly hit US$2,000 an ounce in August to stand now at around US$1,880/oz.