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Bitcoin soars to new heights after hitting $20,000 milestone

The cryptocurrency has more than tripled this year amid rising demand from institutional investors and tech companies

Bitcoin, which soared past $23,000 on Thursday, has more than tripled in value this year. (Dado Ruvic/Reuters)

This story has been updated.

Bitcoin soared to a record high on Thursday, a day after breaching $20,000 for the first time in a mad-dash year that has seen the digital currency more than triple in value.

Bitcoin, the world’s first blockchain cryptocurrency, swelled nearly 17 percent Thursday to $23,187, according to CoinMarketCap.

It operates through peer-to-peer digital exchanges without a centralized hub, and its trading history is marked by wild swings. Bitcoin was trading above $10,000 in February, just before the coronavirus crisis took hold and it slid to about $4,000 within weeks. It was back above $10,000 by October amid growing demand from institutional investors and tech firms, and is now up more than 220 percent since the start of the year, according to Reuters.

Tyler and Cameron Winklevoss, who co-founded the cryptocurrency exchange Gemini, told CNBC last week that this rally differs from others — it nearly topped $20,000 during a massive 2017 surge — because it’s being driven by Wall Street and Big Tech. “This is the most sophisticated investors, the smartest people in the room, buying the bitcoin quietly,” Tyler Winklevoss said during the interview.

PayPal announced in October that it would allow customers to access cryptocurrencies, and the services will extend to Venmo in 2021. Hedge fund investor Paul Tudor Jones has spoken publicly about buying bitcoin to fend against potential inflation. Publicly traded Square invested $50 million in bitcoin in October.

Part of bitcoin’s appeal is that it is of limited supply, said Bob Fitzsimmons, the executive vice president for fixed income, commodities and stock lending at Wedbush Securities. It also offers investors a unique kind of security that holdings in conventional markets don’t have, he said.

“It’s a potential hedge against conventional financial assets. The stock market continues to rally, even though our debt deficits are increasing at what many would consider alarming rates,” Fitzsimmons said in an interview with The Washington Post. “I think people are looking for an alternative other than the stock market right now because where else do you put your money?”

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But bitcoin is highly speculative — it has a floor value of zero, doesn’t accrue interest and has no asset value beyond what the market allows — and has yet to become a widespread form of payment. But bitcoin enthusiasts say the risk is worth the reward.

“As present implied real long-term rates are negative throughout much of the industrialized world, the prospective returns for fixed-income are constrained to say the least,” Fitzsimmons said. “These poor prospective returns have been capitalized into equity markets and likely will be capitalized into real estate markets as the world recovers from the covid-19 shock.”

Bitcoin is going mainstream. Here is what you should know about it.

Bitcoin was designed to have a finite supply when it was launched in 2009: 21 million units earmarked for circulation over 100 years unless the network community determined otherwise. So far, 18 million of those units have been mined.

It’s also designed for privacy: Satoshi Nakamoto, the alias of the bitcoin creator, claimed that the cryptocurrency’s security is in its privacy, as users list their transactions and exchanges under unique pseudonyms. That attribute also makes bitcoin and other cryptocurrencies more attractive to criminals, given that transactions are not tied to banks or governments and can be carried out anonymously.

I don’t care how high the price of bitcoin gets. It’s still too risky for the average investor.

There were 4,049 cryptocurrencies listed on as of Wednesday, worth a total market capitalization of more than $599 billion. Bitcoin is the largest among them, with a market cap of $385.4 billion.