Bitcoin price trades at USD 19,900, sets new record

Bitcoin breached the record on Monday and year to date, the cryptocurrency has gained 167 per cent, according to CoinDesk Bitcoin Price Index (BPI) data.

The new high for the cryptocurrency is believed to be driven by new investors who have shown interest in digital assets in view of the prevailing economic situation due to the Covid-19 pandemic.

The restrictions related to the pandemic have led to a slowdown in economic activities leading central banks around the world to increase spending in a bid to arrest the slowdown.

There is now a new-found interest in bitcoin as some investors view digital assets as a hedge against potential inflation from current monetary policies, said the CoinDesk report.

Despite the fact that bitcoin investors have traditionally argued that the cryptocurrency price is not linked to traditional markets, its positive correlation to traditional markets remains strong above 0.4, according to Coin Metrics.

"Every little boost we are seeing since a few months has a very genuine reason behind it and most of the time it is the new funds or corporations deciding to hold a part of their balance sheet in bitcoin," Sathvik Vishwanath, CEO & Co-Founder of cryptocurrency platform Unocoin, said in a statement.

"These are getting locked up for long term and hence the shortage of the bitcoin for retail investors is giving boost to the price again and again," Vishwanath said.

Experts believe that the surge in the bitcoin price in the past three months is also driven to some extent due to the interest that institutional players have shown in the cryptocurrency.

"The recent price increase is majorly driven by the entry of institutional players and not a retail FOMO looking for a short-term gain," Vikram Subburaj, Co-founder and CEO of Giottus Cryptocurrency Exchange, had said earlier.