Bitcoin’s price continues to surge in 2020 as the cryptocurrency’s price climbed past $19,000 on Nov. 24.
During 2020 the price for Bitcoin has skyrocketed over 150%. Cryptocurrency enthusiasts have credited the price jump to the unprecedented fiscal stimulus from the government in response to the coronavirus pandemic, as well as interest in the cryptocurrency from big-name investors such as Paul Tudor Jones and Stanley Druckenmiller.
Druckenmiller has said that he sees Bitcoin as similar to gold. In an interview earlier in November, he told CNBC that because of Bitcoin’s smaller size and volatility, he believes it could outperform the precious metal.
The interest of big-name financial technology companies in cryptocurrency, especially Bitcoin, may also be a significant contributor to the booming price.
CNBC reports that by one analyst’s predictions, the clients of fintech companies PayPal and Square have been buying most of the new Bitcoin supply entering the market each day. Hedge Fund Pantera Capital estimates that Square clients have accounted for 40% of bitcoin that enters the market in the two years since the product launched.
“It’s having a significant increase in price. You bring on two corporates that are already buying all of the newly issued bitcoins — supply and demand says the price has to go up,” said Dan Morehead, founder and chief investment officer of Pantera Capital and former CFO at Tiger Management, to CNBC.
The involvement of these fintech companies in cryptocurrency may also help protect Bitcoin from another bubble burst the way it did in 2018. Supporters of Bitcoin believe that the involvement of the fintech companies makes it easier to acquire Bitcoin and may help prevent the feared burst.
PayPal recently started letting its users buy, hold, and sell virtual currencies such as Bitcoin. The payments giant is set to enable shopping with crypto early next year.
Brian Kelly, the founder and CEO of BKCM, said the larger fintech companies such as PayPal and Square are affecting the new demand for cryptocurrency. The companies are making it easier for first-time traders interested in cryptocurrency to buy through a mainstream app.
“It’s now easier to buy and transact with, and it’s opening up new demand by taking down a barrier to entry,” Kelly said.
The regulatory landscape in which Bitcoin operates is also much clearer than it was in 2017 and 2018 when the bubble burst. State and federal financial regulatory agencies, including the Internal Revenue Service and the Securities and Exchange Commission, have laid out clear rules for cryptocurrencies.