Bitcoin recorded its highest surge in over a year on Monday to maintain the growth that started in March.
The crypto coin gained 4.4% to $12,424, its highest since July 2019, marking its strongest performance in the year. Reuters attributed the growth to plummeting interest rates and huge bond-buying programmes by central banks across the world that have boosted demand for the digital currency.
Analysts had urged investors to invest more in Bitcoin back in March when it suffered a massive crash.
Jehan Chu, co-founder of Kenetic Capital, an investor in blockchain startups told CNBC then that the digital currency has become known for its volatility but it presents an opportunity to long term investors.
“For those who have long term investment horizons, bitcoin is absolutely a buy during these dips. We can expect more of this volatility sparked by macro health and financial shocks, but ultimately long term investments in the digital future and its key asset bitcoin will be a winning strategy,” he said.
Investors have been looking for an investment to save them from the troubles of coronavirus. While Bitcoin was struggling to meet the expectations of investors running to it for refuge early in the year, gold was performing well.
But in March, the cryptocurrency started to show signs of recovery from the plunge, following governments’ stimulus packages, and its growth has been consistent after the Bitcoin halving in May.
Bitcoin jumped over $12,000 on Tuesday amidst US dollar falls. Winklix, a Blockchain development platform that provides analysis for markets said adjustment of interest rates on US Treasury bonds and substantive easing policies contributed to the growth.
“These policies were instrumental in the selling of large amounts of US dollars, resulting in the fall of dollar index. Going by the brand new data, the US dollar index has taken a beating and it is languishing below 93,” it said.
Global hedge is expecting further erosion of the value of the US dollar. The betting pegs dollar downfall to approximately $5.3 billion this week to reach $24.5 billion. From the perspective of association, the connection amid Bitcoin, dollar and gold decreased, at the same time, the interconnection between Bitcoin and gold strengthened. This has made gold and bitcoin realize their potential in the light of a tumbling dollar index. The analysis said.
The interconnection between Bitcoin and gold was strengthened at the peak of COVID-19 crisis, as they became safe-haven options for investors.
However, Bitcoin was plummeting while gold recorded an increase, until the dollar started showing signs of weakness. Investors hurried to save funds in Bitcoin as gold had become expensive.
“Despite a huge sum of USDT going into exchanges, data from Glass node indicates that the USDT amount is diminishing since April. During the same time, the Bitcoin equilibrium of exchanges has risen. Based on this, we can infer that the USDT going into exchanges were utilized to purchase Bitcoin,” Winklix said.
Bitcoin became the alternative while gold was climbing the roof in the face of dollar weakness. The cryptocurrency will likely continue to surge as long as the dollar remains weak.
However, the record surge has been induced by a couple of other factors which includes the use of cryptocurrency as alternate means of financial transactions that is globally not hindered by regulations.