Bitcoin is the world’s highest-profile cryptocurrency and its price jumped 10.5% to $23,655, taking its gains this year past 220%, buoyed by demand from larger investors attracted to its potential for quick gains and perceived inflation-hedging qualities
The rising demand for Bitcoin in North America has also seen over 200,000 Bitcoin flow to the continent from East Asia. As such, it does appear that a greater focus from institutional investors has buoyed the digital currency in recent months. However, with news of recent vaccine breakthroughs, and the dissipation of uncertainty around who will be at the helm of the United States come January, it remains to be seen whether Bitcoin’s rally will be sustained.
MicroStrategy Incorporated (MSTR) is, perhaps, the most obvious stock to benefit from Bitcoin’s rise. Its stock price began rising after closing the previous day and within 30 minutes of opening was already up by approximately 8.5% from its closing price. It lost some value but still ended the day 13.33% above its closing price from the previous day. The software company, which some analysts liken to a Bitcoin holding company, recently raised $650 million from the bond market to purchase Bitcoin as part of its treasury management strategy.
Early Thursday stock gains included Marathon Patent Group Inc.’s rise of as much as 20%, lifting shares to the highest since March 2018. Bit Digital Inc. also climbed as much as 20%, Riot Blockchain Inc. added 10% and MicroStrategy Inc. rose 7.8%, while Silvergate Capital Corp., which was upgraded at at KBW, rallied 15% to a record. Cryptocurrency-linked stocks in Asia had jumped earlier, following gains for the U.S. names after Bitcoin’s rise on Wednesday.
PayPal Holdings Inc., which enabled customers to use cryptocurrencies in October, rose 3.2% to a fresh record high, and Square Inc., which put $50 million in Bitcoin on a crypto “empowerment bet” in October, climbed 3.4%, also to a new high.
The world’s largest digital currency has more than tripled in value this year and some observers predict more to come, arguing Bitcoin is increasingly seen as a portfolio diversifier at a time of dollar weakness and potential inflationary pressures.
“While a lot of skepticism still surrounds cryptocurrencies, some in the investment community appear to have warmed to them” and this is driving prices higher, said Michael Hewson, chief markets analyst at CMC Markets.
On Wednesday, Scott Minerd, Guggenheim Investments’s chief investment officer, said Bitcoin’s scarcity combined with “rampant money printing” by the Federal Reserve mean the digital token should eventually climb to about $400,000.
Last week, Massachusetts Mutual Life Insurance Co. invested $100 million in Bitcoin for its general investment fund, becoming the latest mainstream firm to dabble in the digit asset.