Bitcoin hit a record high $34,800 on Sunday, building on a
2020 rally that saw it more than quadruple as bigger US investors jumped into
the market. It then fell sharply on Monday amid volatility in highly leveraged
futures markets, before recovering losses.
The second-biggest cryptocurrency, ethereum, which tends to
trade in tandem with Bitcoin, also on Monday hit its highest level since
January 2018, touching $1,170.
Overall daily trading volumes in cryptocurrencies hit $68.3
billion, the data from UK research firm CryptoCompare showed on Tuesday. Daily
volumes had averaged $13.1 billion in 2020, the data showed.
Bitcoin's record high came less than three weeks after it
crossed $20,000 for the first time on December 16.
Fuelling Bitcoin's rally has been the perception it can act
as a hedge against the risk of inflation as governments and central banks turn
on the stimulus taps to counter the COVID-19 pandemic. Its potential for fast
gains also attracted demand.
Crypto trading volumes regularly spike during periods of
extreme price swings, highlighting the central role for speculative traders in
digital currency trading.
© Reuters
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