Bitcoin flies above $12,000 to one-year high as investors search for yield

  • Bitcoin rose above $US12,000 on Monday as investors continued to hunt for inflation hedges amid near-zero rates.
  • The world’s most popular cryptocurrency has rallied more than 200% from its March low as industry giants and retail investors alike scoop up the token.
  • Much of the rally has been fuelled by tanking real yields. With Treasurys offering little return, investors have turned to hedges including gold and bitcoin to protect against rising inflation.
  • Watch bitcoin trade live here.

Bitcoin surged above $US12,000 on Monday and held the level in early Tuesday as investors continued to seek yield in unorthodox assets.

The world’s most popular cryptocurrency traded as high as $US12,476.7o over the past 24 hours, hitting its highest level since July 2019. Bitcoin has rallied past several key psychological thresholds in August after choppy trading throughout the summer. The upswing comes as the stock market closes in on record highs and investors brace for a potential rotation into safe-haven assets.

The digital currency is also boosted by tumbling real yields. The Fed’s plan to hold rates near zero for the foreseeable future is driving real Treasury yields below zero and forcing investors to find healthy returns elsewhere. Some have piled into gold, as low yields erase the opportunity cost of holding the non-yielding metal.

Others are experimenting with cryptocurrencies, anticipating their insulation from inflation will lift prices higher. Industry giants including Michael Novogratz and Paul Tudor Jones recently revealed growing stakes in bitcoin, with the former telling Bloomberg TV last week that roughly a quarter of his net worth is linked to the coin.

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Bitcoin’s latest advance comes on the heels of a strong year-to-date performance. The token is up about 70% in 2020 so far and has tripled from its March low.

Still, bitcoin needs to soar another 62% to retake its 2017 record of nearly $US20,000 per coin.

The fresh interest from institutional names could drive the interest needed to place bitcoin near its previous peak. Young, risk-loving investors have been propping up cryptocurrency for years, Novogratz said in a recent interview with “The Tom Ferris Show” podcast. Once big-money players enter the fray, more investors will take bitcoin and its uses beyond hedge-positions seriously, he added.

“Bitcoin has been a young man’s game. It’s been Gen Z and the millennials, it’s been bought on Coinbase app or Square or Robinhood,” Novogratz said. “Those things aren’t going away. Quite frankly, there are going to be more of them.”

Bitcoin traded at $US12,197.50 as of 8:45 a.m. ET Tuesday.

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