Bitcoin breaks the $20,000 barrier to hit all-time high (and the only way is up, probably)

Antoni Trenchev, of crypto lender Nexo, said: “We have a new line in the sand. Now focus shifts to the next round number of $30,000.”

The controversial digital token - which has a 12-year history of steep ascents and steeper drops - has been hovering just below the threshold since last month, when its latest rally gathered pace on the back of an announcement that PayPal would allow its use on their network.  

The sudden jump means currency is now up more than 170% this year, having risen steadily since March when it was brought low by the pandemic. That ended a gradual recovery from the cataclysmic 70% crash that followed 2017’s retail investor-fuelled high.

Fans say this time things are different: it is being sought out by investors as a hedge against inflation rises that could follow massive government spending in the US and around the world to prop up economies devastated by Covid-19.

The $20,000 milestone moment came shortly after online stockbroker AJ Bell revealed the XBT Bitcoin Tracker had topped the 2020 league of exchange traded funds.

But AJ Bell analyst Laith Khalaf warned: “Bitcoin has been on the rampage this year but we have been here before.

"The last time Bitcoin surged towards a record high, it promptly fell back down to earth with a great big bang. Bitcoin is subject to wild price movements, so anyone thinking of investing in this area should do so with a very small amount of money that they can afford to lose. 

“In a world where the existing currency system is highly digitalised, it’s hard to see where Bitcoin can score an edge, particularly when its volatility inhibits use in the wider economy for regular payments such as wages and bills.”

Crypto fans were nevertheless quick to hail the “historic” ascent.

Marcus Swanepoel, CEO of global cryptocurrency exchange Luno, said: “Bitcoin breaking the $20,000 barrier is a significant milestone, but like with any record-breaking event, it will prompt the question: what’s next?

“In a year of economic uncertainty, bitcoin hasn’t wavered, outperforming the likes of gold and other stocks and shares, so a further increase in 2021 is certainly on the cards.”  

Emiliano Grodzki, of  Bitfarms, said:  “In just under a month, we’ve seen Bitcoin firstly hit an all-time-high, and now break the long awaited $20K mark, there is no doubting it - this is one of the most exciting periods of time in the history of cryptocurrency to date.”  

But Glen Goodman, former BBC and ITV contributor and author of The Crypto Trader, cautioned: "History has a warning for people buying at the new all-time-high. 

"While I'm optimistic about the long-term prospects for Bitcoin, four years ago we had a very similar situation with Bitcoin breaking new ground, but just two weeks later its price plummeted by more than a third. 

“History doesn't always repeat itself, of course, but the lesson is to be on your guard. The market often teaches harsh lessons in humility to those who risk too much on what they're told is a sure thing.”