Bitcoin hits $40,000—briefly

Bitcoin briefly cracked $40,000 on Jan. 7, reaching a new all-time-high of $40,180.15 at 1:21 p.m. EST according to CoinGecko. 

It then plummeted nearly $3,000 before jumping back to its current $39,200.

Trading volume was more than $83 billion over the past 24 hours, according to CoinMarketCap.

The volatility was expected due to the psychological selling pressure at a big number like $40,000.

Still, it briefly put bitcoin’s price at nearly 10 times its 2020 low of $4,106.98, which hit on March 12.

Bitcoin’s growth has been powered by a number of factors this year, beginning with the COVID-induced federal stimulus spending tear, which devalued the dollar. Then there’s the psychological effect of the pandemic, which has brought many people running to “safe haven” assets—a category that is increasingly seen as including BTC.

One of the biggest changes is the growing acceptance by mainstream investors, including a number of major institutional customers and several legendary investors like Stanley Druckenmiller and Paul Tudor Jones. MicroStrategy CEO Michael Saylor led the way, with several nine-figure investments that have, with price increases, put his firm’s holding at well over $1 billion. 

Other big buys included a $100 million investment by mainstream insurance giant Mass Mutual and, most recently, a $25 million investment (since grown well past $40 million) by SkyBridge Capital’s Anthony Scaramucci which launched the SkyBridge Bitcoin Fund on Jan. 4.

In making that announcement, Scaramucci pointed to another big factor behind bitcoin’s growth: it’s growing acceptance as a store of value—a new “digital gold.”

Scaramucci pointed to that, telling Bloomberg that “Bitcoin is better at being gold than gold is at being gold.”

He added that his firm believes Bitcoin “is in its early innings as an exciting new asset class.”

Blackrock CIO Rick Rieder also argued that bitcoin could replace gold as a store of value. 

“[D]o I think it is a durable mechanism that—do I think could replace gold to a large extent? Yeah I do, because it’s so much more functional than passing a bar of gold around,” he told CNBC on Nov. 20

A number of major financial institutions have also jumped onboard, among them Citibank and JPMorgan Chase—despite CEO Jamie Dimon being a famous bitcoin skeptic. On Jan. 5, analysts at the banking giant predicted bitcoin will hit $146,000, although over the course of several years.