The price of bitcoin surged past the $20,000 mark on Wednesday morning to $20,820, a new all-time-high and the latest milestone in a 2020 surge that accelerated during the COVID-19 pandemic. The new high took bitcoin’s market cap to $384 billion.
Bitcoin already bested its December 2017 peak on Nov. 30 when it topped $19,800, but it swung wildly in the days after, and $20,000 was seen as a major resistance level.
The majority of cryptocurrency exchange sites say this is the first time bitcoin has ever hit $20,000, though CoinMarketCap (the data source Yahoo Finance uses for its cryptocurrency charts) listed the 2017 high at $20,089, and crypto exchange BitMEX had it at $20,093. The reason for the variation is that unlike stocks, which are listed on a single exchange at a single price, cryptocurrencies can be bought and traded on many different exchanges and the exchanges can vary in the price they list; many of them give a blended average of market prices from multiple exchanges. But all exchanges agree that Wednesday marks a new all-time high.
Bitcoin is now up 190% in 2020.
The surge has been driven by institutional interest, as Wall Street firms have begun to allocate a small amount of their portfolio to bitcoin, and as a handful of influential investors have done the same and spoken publicly about it, including Paul Tudor Jones and Stan Druckenmiller.
The institutional trend has happened alongside two major consumer-facing payments companies buying in: PayPal and Square.
PayPal (PYPL) announced on Oct. 21 that it will soon allow buying of bitcoin and other cryptocurrencies, and paying with bitcoin, through PayPal and Venmo. That news sent PayPal shares and bitcoin both surging.
Square (SQ) has been pro-bitcoin since 2018, when it added a bitcoin buying feature to its Cash App, but in October the company went further by buying $50 million worth of bitcoin as an asset for its balance sheet, separate from Cash App. For Q3 Square also reported record bitcoin revenue of $1.63 billion, up 618% from Q3 2019, and record bitcoin profit of $32 million, up 1,500% from Q3 2019. (MicroStrategy, a cloud services company, also purchased $425 worth of bitcoin this summer through Coinbase.)
Wall Street institutions were warming to bitcoin before the pandemic, but crypto executives say the economic trends of the pandemic—including government stimulus payments and monetary easing—have boosted bitcoin’s appeal further.
“When you print trillions of dollars more paper money, it’s going to drive up bitcoin and other cyptocurrencies,” Dan Morehead, CEO of crypto investment firm Pantera Capital, said on Yahoo Finance Live in August. “Gold’s going to go up, bitcoin’s going to go up. It is a hedge to paper currency being debased.”
Bitcoin’s surge has boosted the portfolio of Grayscale Investments, the largest crypto asset fund, to more than $12 billion.
“I think we are in a very different market than we were in 2017,” says Grayscale managing director Michael Sonnenshein. “Bitcoin and the digital currency market overall has become way more of a two-sided market with the development of derivatives, options, a lending and borrowing market. I also think who is investing and why they’re investing has changed materially… One of the most prevalent narratives out there is rotations out of gold and into assets like bitcoin, which is certainly something that has resonated with investors, but you also have a backdrop of new companies and other forces moving the needle for investors. You have corporations adding bitcoin to their balance sheets, like Square and MicroStrategy. You have companies like PayPal opening the door to investors and merchants being able to use PayPal to not only buy and sell crypto, but use crypto as part of their commerce. And so you have really an environment that looks very, very different than it did in 2017.”
