Bitcoin on track for its longest monthly winning streak in more than a year as price edges closer to $30,000
- Bitcoin rose to an all-time high above $28,000 over the Christmas weekend
- It is on track for its longest monthly winning streak since the middle of 2019
- The price of bitcoin has more than tripled during 2020 amid the pandemic
The price of bitcoin hit record highs over the Christmas period and touched $28,500 yesterday, setting it on track for its longest monthly winning streak in more than a year.
The cryptocurrency has been rising in recent months, with the run of returns over October, November and December so far being its longest stretch since the middle of 2019.
The price has fallen by 4 per cent today and currently stands at $26,596 per coin, but this is still roughly $10,000 more a coin than a month ago and year lows in March which saw it dip below the $4,000 mark.
Bitcoin has been rising significantly recently, reaching an all-time high of $28,365 on Sunday
Someone who bought £1,000 worth of the cryptocurrency at the start of 2020 would have seen that turn into £3,750 today, a return of 275 per cent in less than a year.
The surge has largely taken place during the second half of 2020, having initially seen the price fall to as low as $3,800 a coin in mid-March when investors were dumping assets of all kinds in a mass sell-off in response to the coronavirus.
But now, many see the cryptocurrency as a hedge against dollar weakness and the risk of faster inflation.
Even asset managers and banks are turning to bitcoin to diversify their holdings, who until fairly recently turned their noses up at it.
Tom Stelzer, a crypto specialist at Finder, said: ‘Bitcoin has proven to be a valuable hedge, beating out traditional store-of-value assets like gold.’
Opinions remain divided with some expecting the bubble to burst soon as it did in 2018 after a similar surge.
‘My sense is we’re very close to a top – we could hit $30,000 though,’ said Vijay Ayyar, head of business development with crypto exchange Luno in Singapore.
‘We should definitely see a pullback, but the magnitude is probably lesser. We might only see 10 per cent to 15 per cent drops.’
Both eToro and Revolut, which allow everyday British investors to buy and sell bitcoin, told This is Money they had seen big increases in applications and the number of customers holding bitcoin around the time it hit a new all-time high in December.
In December 2017 and the start of January 2018, the price of bitcoin saw a similar surge in the festive period.
The price shot up from $10,000 a coin to touch nearly $20,000 a coin, before tumbling to around $3,000 a coin towards the end of 2018.
The price of bitcoin has shot up over 2020 but most significantly over the past three months
What about the FCA’s bitcoin ban?
From January, UK cryptocurrency investors may find it slightly more difficult to buy into bitcoin.
That’s because financial regulators are banning the sale of cryptocurrency derivatives and other instruments which mimic the performance of cryptocurrencies like bitcoin to retail investors, amid fears they could see investors suffer huge losses.
What this means is that investors will no longer be able to buy into things which track the price of bitcoin, like certain investment funds, and will have to buy into the coins themselves.
Importantly, this means the likes of eToro and Revolut, as well as cryptocurrency exchanges like Coinbase, will still be open to UK everyday investors.
Simon Peters, of eToro, thinks this will have only a minimal impact on UK cryptocurrency traders. He said: ‘Interest is clearly skewed towards holding real crypto, evidenced by the fact that 85 per cent of all crypto positions on eToro in the UK are invested in the underlying asset.’