The new year has gotten off to a bullish start, with Bitcoin taking the lead. The crypto-currency reached a three year high on Monday, grasping the $1000 mark.
Inching higher in the last few months, Bitcoin’s surge in price is derived from investors aiming to hedge against geopolitical risk as well as the devaluation of the yuan. The crypto-currency saw a boost in demand in November, following the election of Donald Trump.
China is the major driving force of the price hike. Chinese investors seek refuge in the asset as the devaluation of the yuan and fears of capital control loom.
Climbing interest rates can be seen as one of the drivers in the rising valuation of Bitcoin. As an alternative to traditional currency, bitcoin is seen as exempt from the limitations traditional currencies endure as not controlled by a central bank.
The supply of Bitcoin reduced in the past year. Those ‘’mining’’ the crypto-currency – where users are rewarded with Bitcoin if they are able to solve mathematical puzzles – has now diminished in a process known as ‘’halving’’.
The crypto-currency is stabilising although it still remains the riskier bet for investors.