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Bitcoin approaches record high as risk-on rally accelerates

World’s largest crypto bounces back.

Bitcoin is picking up momentum once again, approaching a record high set last month, amid a broader risk-on rally in financial markets.

The world’s largest digital asset rose to as high as $57 679, bouncing back from a rout at the end of February that followed the all-time high of $58 350 set on February 21. President Joe Biden on Thursday signed the $1.9 trillion pandemic-relief bill into law, bolstering optimism in financial markets.

“Bitcoin’s resilience is proving to be the stuff of legend,” said Antoni Trenchev, managing partner and co-founder of Nexo in London, a crypto lender. “Every correction is an opportunity to reset and restart the move upwards.”

Bitcoin is up more than sevenfold in the past year amid increasing institutional interest. Advocates champion the cryptocurrency as a store of value akin to gold that can act as a hedge against inflation and a weaker dollar. Others argue that the rally is a giant stimulus-fuelled bubble on track to burst like it did in the 2017-2018 boom and bust cycle.

Industry participants, however, argue that the rise of institutional adoption will prevent that fate, especially Tesla’s $1.5 billion investment in Bitcoin and CEO Elon Musk’s endorsements of the digital asset on social media. Billionaire investor Mike Novogratz, who runs Galaxy Digital Holdings Ltd., has said that Bitcoin could reach $100,000 by the end of the year.

“The announcement from the White House is very significant for risk assets in general, and crypto-assets specifically,” said Simon Peters, analyst at multi-asset investment platform eToro, adding that the “floodgates” are now open in terms of new liquidity.

© 2021 Bloomberg

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