Bitcoin soared to a new all-time high on Wednesday, May 21, surpassing its previous peak from January, driven by improving investor confidence and changing macroeconomic factors that boosted the cryptocurrency market. The world’s largest digital asset hit $109,760.08 at its highest point and was last trading up 1.1% at $108,117.
This latest surge is linked to a combination of easing trade tensions between the United States and China, alongside Moody’s downgrade of U.S. sovereign debt, which has led investors to seek alternatives beyond the U.S. dollar. The rally represents a notable 50% recovery from April’s lows, reflecting strong momentum supported by growing institutional interest and a more favorable regulatory environment in the U.S.
“Now that January’s high has been surpassed, and the 50 percent upside from April’s lows has been achieved, bitcoin enters blue sky territory with tailwinds in the form of institutional momentum and a favorable U.S. regulatory environment,” said Antoni Trenchev, co-founder of digital asset trading platform Nexo, in a statement to Reuters.
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Bitcoin’s performance has closely tracked trends in technology stocks, which have also gained from a renewed appetite for risk. Since early April, the Nasdaq index, dominated by tech companies, has risen by 30%. At the same time, ongoing weakness in the U.S. dollar has enhanced Bitcoin’s attractiveness as a hedge against fiat currency depreciation.
Market analysts and crypto supporters highlight growing involvement from traditional financial institutions as a key driver behind the recent gains. Notably, JPMorgan CEO Jamie Dimon, historically a critic of cryptocurrencies, announced this week that the bank will now permit clients to purchase Bitcoin. In another significant milestone for the sector, Coinbase, a leading cryptocurrency exchange, was recently added to the S&P 500 index.
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Despite recent gains, the cryptocurrency sector continues to face challenges. On Monday, Coinbase revealed that the U.S. Department of Justice has opened an investigation into a recent data breach at the company.
Trenchev suggested that Bitcoin may still have potential for further growth, pointing to historical patterns tied to the four-year halving cycle, during which miner rewards are cut. “We’re still in year four of the Bitcoin price cycle, the year after the halving, which has historically been when its best performance occurs,” he said. He added that a $150,000 price target for 2025 remains attainable, though ongoing macroeconomic uncertainty and possible volatility continue to present risks.
Meanwhile, Ether, the second-largest cryptocurrency by market cap, did not follow Bitcoin’s upward trend, last trading down 0.5% at $2,513, highlighting a divergence in performance among major digital assets.
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