Bitcoin Price Hits $20,000 For The First Time In History

The price of Bitcoin (BTC) has reached $20,000 for the first time in history on Dec. 16. The historic milestone comes just over two weeks after breaking its previous all-time high.

At the same time, this rally is different from 2017’s due to several reasons that could help BTC soar even higher. These include growing institutional demand, the increasing perception among investors that BTC is a store of value, and stronger network fundamentals.

MicroStrategy, the publicly-listed company in the United States that purchased $450 million worth of BTC earlier this year, sparked a trend that has led other institutions to allocate their capital into Bitcoin.

In December 2017, data suggested that retail and mainstream investors were behind the Bitcoin rally. At the time, CME BTC futures had just launched and there was a lack of institutional investment vehicles.

As such, the rally was mostly fueled by retail investors, which came to an abrupt stop after a strong whale-induced sell-off.

This time, institutional investor-focused platforms are seeing an explosive increase in trading activity. For instance, the CME BTC futures market recently notched a $1.27 billion open interest, ranking just behind OKEx as the second-largest in the global Bitcoin market.

The perception of BTC as a hedge against inflation and a stable store of value could make BTC compelling for the broader financial sector in the medium to long term. Michael Saylor, the CEO of MicroStrategy, said:“Bitcoin is the world’s best treasury reserve asset and the emerging dominant monetary network. It is the solution to the store of value problem faced by every individual, corporation, and government on earth. As this news gets out, the world is going to change for the better.”

At the same time, Bitcoin’s performance has dwarfed gold’s this year once again as well as the S&P500’s, despite the precious metal and the latter breaking their own all-time highs this year.

Hence, it is no surprise that Wall Street is now taking Bitcoin more seriously than in 2017. Further evidence of this was revealed on Dec. 3, when the S&P 500 announced its plans to roll out its own cryptocurrency indexes next year.

[image:pixabay]

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