Bitcoin hits fresh record high near $42,000, climbing 40% so far this year

Finance

In this photo illustration, visual representations of the digital cryptocurrency, Bitcoin are arranged on January 4, 2021 in Katwijk, Netherlands.

Yuriko Nakao | Getty Images

Bitcoin’s price rallied to a fresh all-time high on Friday, smashing past $41,000 for the first time as investors increasingly view the cryptocurrency as an inflation hedge.

The world’s most valuable cryptocurrency traded as high as $41,756 at 7:26 a.m. ET, according to data from Coin Metrics. It was last trading up about 6% from a day earlier, at $41,190.

Bitcoin has extended its 2020 rally — which saw it skyrocket over 300% — into the new year. It is currently up over 40% so far in 2021, and on track to post its second-best week since the peak of the December 2017 surge.

The cryptocurrency’s blistering bull run has attracted attention from institutional investors, who view it as a potential safe haven asset akin to gold. Strategists at JPMorgan recently said that bitcoin could hit $146,000 in the long term, as it competes with gold as an “alternative” currency.

The idea of bitcoin as a hedge against inflation has continued to gain traction among investors, amid unprecedented stimulus from governments around the world to tackle the coronavirus crisis. Analysts have argued such action could lead to a spike in inflation.

Still, skeptics like American stock broker Peter Schiff and economist Nouriel Roubini view bitcoin as a speculative asset with no intrinsic value and a market bubble likely to burst at some point.

There are signs of a sharp rise in demand for cryptocurrencies from retail investors, who fear they may miss out on the action. Crypto exchanges such as Coinbase and Binance have seen spikes in activity, often resulting in technical issues on their platforms, while Google search interest in “bitcoin” rose significantly at the start of the month.

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