While stocks, oil and gold prices careened last week, one asset set new highs for the year: bitcoin.
The price of the digital currency has surged about 90% in 2020 and traded as high as $13,848 on Tuesday, according to CoinDesk. That is the highest level since January 2018, when bitcoin was coming down from its record high of $19,783 set in the previous month.
Many investors agree the renewed surge of interest is tied to bitcoin’s potential as a hedge against inflation.
Bitcoin’s proponents have touted that prospect for years, mainly because the bitcoin network has a set limit on the number of units that can be created: 21 million. With the coronavirus pandemic wracking economies across the globe, governments and central banks have been forced to spend trillions to prop up their economies while sapping the purchasing power of their currencies. That has revived fear that inflation will ramp up in the coming years, and that fear is winning bitcoin new converts.
Some of them include publicly traded companies. Square Inc., which allows users to buy bitcoin on its Cash App, bought $50 million worth of the digital currency in October to use as a hedging instrument in its corporate treasury.