Bitcoin topped $40,000 for the first time on Thursday, as it continues a rally that has seen the digital currency climb a lot more than 700% from a March 12 closing low.
Elevated demand from institutional, corporate, and more recently retail investors has driven bitcoin`s surge this year, attracted by the prospect of quick gains in a world of ultra-low yields and bad interest rates.
The world`s most popular cryptocurrency climbed simply because high as $40,402.1% At $39,100. 16.
Market participants though warned a correction could be in the cards after a scorching rally.
“While further growth is inevitable, investors should not expect this to move in a straight line,” said Gavin Smith, chief executive officer of cryptocurrency consortium, Panxora Group.
“The reality is that bitcoin is definitely not being a magic money tree, nor is it free from downward price swings. In fact, we can expect dips as sharpened as 25% at times as investors periodically withdraw income,” he added.
Bitcoins surge happened as the market cap for the entire cryptocurrency sector topped $1 trillion on Thursday, according to data trackers CoinMarketCap and CoinGecko.
Glassnode, which provides insight on blockchain data, noted that retail interest in bitcoin has increased the last few weeks, with the number of bitcoin addresses or wallets holding a “non-zero amount” of the virtual currency reaching an all-time high of more than 33 million.
The information provider also said while interest in bitcoin and news coverage have grown, it is far from being in bubble territory. The number of daily new bitcoins has still not reached 2017 levels, Glassnode said, suggesting the currency is experiencing strong organic growth in adoption, but not the sort of “viral growth typical of a bubble.”
After Sunday’s record, Antoni Trenchev, managing director and co-founder of Nexo, predicted that the currency will be “on the road to $50,000 probably in the first quarter of 2021”.
The latest gains come three days after bitcoin closed out a year in which the cryptocurrency rose more than 300 per cent, with an almost 50 per cent gain in December alone.
On November 30, bitcoin breached a nearly three-year-old high of $19,793. And, on December 31, Bitcoin topped $29,000. Cryptocurrency has surged nearly half in just 15 days since it achieved the psychological milestone of $20,000 on December 16.
Bitcoin rally continues in 2021
Recent gains have taken bitcoin’s market capitalisation past $536 billion, according to industry website CoinMarketCap.
The popularity of Bitcoin in the recent month could be after PayPal – the online payment major – announced that it’ll enable its account holders to use Bitcoin. This marks a colossal 400 per cent increase in the past eight months.