Bitcoin is on the move again. Priced just above $13,000, it is up 80% on the year, which is outpacing the year-to-date returns from leading equity performers in the S&P 500 including most of the infamous FAANG members. In fact, it has recently surpassed mighty Amazon.
Looking broadly at leading market indices, bitcoin’s performance this year is even more impressive. It is almost tripling the Nasdaq 100, which is up 32%. Additionally, it is outperforming the S&P 500 by 1600%, while the DJIA remains in negative territory.
So, what is behind this recent surge? The catalyst was yesterday’s announcement that PayPal will allow its millions of U.S. customers to purchase bitcoin, along with ether, litecoin, and bitcoin cash, directly from its app. Additionally, the company said that it would expand its crypto support to its social payments app Venmo and make the offering available internationally in 2021.
But that is not all. This announcement is the capstone to several pieces of bullish news for bitcoin, including major institutional allocations from publicly listed companies and multi-billion dollar asset managers such as Square, MicroStrategy, and Stone Ridge Asset Management.
This Time Might Be Different
The last time the price of bitcoin was this high was during the climbdown from the 2017-2018 crypto bubble that saw its price approach $20,000. While there is no guarantee that bitcoin will revisit this lofty perch anytime soon, industry insiders are cautiously optimistic due to:
- The more gradual ascent in taking place in 2020 rather than the sharp peaks and valleys from a few years ago
- Macroeconomic trends such as massive inflationary spending from central banks that are debasing fiat currencies
- Overall network health such as record numbers of active accounts and computer power being used to secure the network
Let Forbes Help You Get Your Bearings
There is a lot of excitement in bitcoin, but also a lot to digest. For those interested in learning about how crypto assets and blockchain technology can help them secure their financial future, we have a solution: the Forbes CryptoAsset and Blockchain Advisor premium newsletter.
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- How the upcoming U.S. election will impact the price of bitcoin, primacy of the U.S. dollar, and get a new perspective on Chinese efforts to digitize and internationalize the yuan
- What the recent bitcoin purchases made by major corporates mean for their respective businesses and whether or not they should be incorporated into your portfolio