The price of bitcoin hit US$20,000 for the first time, a milestone for the world’s most popular cryptocurrency, fuelled by institutional demand and the participation of Paypal, the giant global payment service provider.
According to Bitkub, Thailand’s leading digital exchange, bitcoin hit a new all-time high of $21,569 on the US-based Coinbase market, a rise of 12.5%. In Thailand, bitcoin peaked at 700,000 baht on Bitkub, making a 200% return, which makes bitcoin the best performing asset this year.
“At this time, all roads seem to lead to bitcoin,” said Poramin Insom, founder and board member at Satang Corporation, a local digital exchange.
However, the market needs to wait and see whether the price will hover above this latest new high or face a hard correction, he said.
He said if the price maintains its momentum, the market expects it to reach $50,000 by 2022, supported by limited supply thanks to the price halving in May and the growth of giant investors led by MicroStrategy, a mid-sized US listed company that chose bitcoin as the currency to manage its cash in hand.
Pandemic Aided in Rise of Bitcoin
MicroStrategy has been investing in bitcoin since the end of 2019 and it has continued to accumulate it until reaching its current investment level of over $1 billion. MicroStrategy’s investment in bitcoin has been a good strategy in terms of protecting funds from inflation and the company has encouraged other companies to do the same, said Mr Poramin.
“The US companies that have excess cash and liquidity are turning their cash, which can depreciate by time value and inflation, into bitcoin. It is a portfolio management strategy,” he said.
Mr Poramin said the US government stimulus which injected money into the economy is causing inflation and also excess cash. The stimulus money is also driving up the price of other assets, including gold, which is an inflation-protected asset. It has risen for two consecutive days, responding to the US stimulus package.
Nattapong Hirunyasiri, chief executive of MTS Gold Group, said another factor spurring the price of the precious metal is concern about US dollar depreciation.
“The global gold price could possibly reach $2,000 in 2021 while the domestic gold price could reach 30,000 baht if the baht-against-US dollar is not stronger than this,” Mr Nattapong said. The domestic gold price hit an all-time high this year of about 31,000 baht.