Bitcoin Reaches Record High Of $19,920 : All You Need To Know

Data show that year to date, Bitcoin has gained nearly 170% and more than 400% since yearly lows in March

The price of bitcoin reached a record high of $19,920.53, overtaking a previous near 3-year old record of $19,783.21, as seen on December 18, 2017. The cryptocurrency has witnessed a massive rally this year, and it outdid another high - $19,850.11 on December 1 - only a day earlier, according to data from cryptocurrency exchange Coindesk. Bitcoin has rallied 170% since the beginning of the year and 400% since March, correlating to the world witnessing the onset of the first wave of COVID-19 linked restrictions and lockdown.

Coindesk data also show bitcoin trading almost $1,000 short of the record high close to the $18,965 mark at the time of publishing, but due to its volatility, bitcoin can rally as quickly as it can fall. It has gained more than 15% since Friday, and on May 10, when it fell 10%, the price recovered in just four days. The $20,000 mark, however, still eludes bitcoin.



The journey of Bitcoin this year has been quite dramatic and has outperformed many other major asset classes. Here are some equity benchmarks and stocks in comparison:

  1. Indian benchmark indices Nifty has rallied 7.7% this year (YTD) and Sensex 8.17%
  2. Reliance Industries Limited has rallied 30.76% (YTD) on the National Stock Exchange
  3. Nasdaq of the New York Stock Exchange [NYSE] has rallied 37.7% this year (YTD)
  4. Investing in Tesla, however, would have made you richer than if you had invested in bitcoin this year, as it has rallied nearly 600% YTD on the NYSE.


Also Read:The Curious Case Of Wolf Gupta - And The Whitehat Jr Conundrum


It has also received substantial institutional support. In October, PayPal enabled Bitcoin and other cryptocurrencies to be held, bought and sold through its accounts, and as a medium of payment at nearly 26 million outlets; receiving a first-of-its-kind 'Bitlicense' from the New York State Department of Financial Services. In September, Mastercard enabled a platform for central banks to test digital currencies (of which cryptocurrencies like Bitcoin is a part) including a potential rollout. Visa is partnering with crypto startup BlockFi to issue a credit card offering bitcoin rewards against purchases instead of cash or air miles. Payments platform Square - CEO Jack Dorsey also heads Twitter - invested $50 million dollars in bitcoin to raise its total holding of the cryptocurrency to 1% of its assets.

On the other, Bitcoin - and peer cryptocurrencies in general - are turning to be possible places of refuge in times of economic turmoil, general uncertainty and as a medium to bypass mainstream payment channels. Venezuela, facing economic crisis and hyper-inflation due to sanctions by the United States, already has a thriving cryptocurrency ecosystem with the government's blessings. Reports suggest that President Nicholas Maduro has told the country's parliament that he would encourage the use of cryptocurrency in international trade and domestic transaction. Pizza Hut is accepting select cryptocurrencies in Venezuela as a method of payment. Iran passed a law in October this year to use a cryptocurrency as a conduit to fund imports. Its economy too is in the doldrums due to the ongoing COVID-19 pandemic and since US President Donald Trump re-imposed sanctions on the country after withdrawing from the Iranian nuclear deal (officially called the Joint Comprehensive Plan of Action) in 2018.

Cryptocurrency in India

In a statement on December 29, 2017, while price of bitcoin was near its previous all-time high, the Ministry of Finance issued a statement cautioning investors against investing in it. "The investors and other participants therefore deal with these VCs [virtual currencies] entirely at their risk and should best avoid participating therein", it said, further saying it was like a ponzi scheme.

On April 8, 2018, just when the bitcoin and cryptocurrency bull run that started in 2017 was showing signs of cooling, the Reserve Bank of India [RBI] issued a notification banning all entities it regulated - banks, non-banking financial companies, payments banks and small finance banks - from providing services to cryptocurrency exchanges. This included opening accounts, granting loans, holding collateral or any other services. Entities that were offering such services had to stop doing so in three months.

Read the notification here.

In June 2018, a Right to Information query filed by lawyer Varun Sethi with the RBI showed that the central bank had neither conducted any research, consultation before issuing the ban nor formed any committees looking into blockchain before issuing the ban.

The cryptocurrency and bitcoin mania also spread to India this year catalysed by a ruling by the Supreme Court in favour of traders and exchanges. On March 4, it struck down the RBI circular that outlined the ban.

Indians seems to be spending millions on cryptocurrency trading daily, with WazirX, India's largest cryptocurrency exchange and CoinDCX seeing signups increase 125% and 85% over the last quarter.

The former sees $19-26 million in daily trading volumes. Demographics seems be a factor too, as 70% of its users are under the age of 30.

Also Read: RBI Bats For Large Corporate Houses To Own Banks: All You Need To Know


Updated On: 2020-12-04T19:17:39+05:30
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