The bitcoin juggernaut keeps running, with the digital currency hitting a new record high Monday as frenzied investors grab for a piece of the pie.
Bitcoin recently traded at $19,688, up 1.83%, and touched a high of $19,737 earlier Monday. The previous all-time peak was $19,511, reached in December, 2017. Bitcoin has soared 73% year to date.
The currency has gained credibility recently from the endorsements of PayPal (PYPL) - Get Report, Square (SQ) - Get Report and money managers Bill Miller, Paul Tudor Jones and Stanley Druckenmiller. Enthusiasts argue that bitcoin is a store of value and a hedge against inflation and a falling dollar.
But skeptics say bitcoin is rather a means of speculation. They point out that the currency is barely used for legitimate commerce, and that it’s prone to boom-and-bust cycles. It plunged 10% from Nov. 23 to Nov. 26 before rebounding, for example. And after reaching its last record peak in December, 2017, it cratered more than 80% over the next year.
Even gold, the established hedge against inflation and a weak dollar, has undergone a roller coaster ride through the years.
Bitcoin faces something of a Catch 22. Until a significant amount of legitimate commerce is conducted in bitcoin, it’s likely to remain volatile. But it’s unlikely to see much legitimate commerce until its price has stabilized.
One ominous sign: about 2% of bitcoin ownership accounts that can be tracked account for 95% of bitcoin outstanding, according to researcher Flipside Crypto, cited by Bloomberg.
But the bandwagon rolls on. Guggenheim Partners said Friday that its Macro Opportunities Fund may invest in Grayscale Bitcoin Trust.