Bitcoin Tops $20,000 for First Time

 Bitcoin Tops $20,000 for First Time

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A man bought bitcoin at a kiosk in Nigeria in September.

A man bought bitcoin at a kiosk in Nigeria in September.

Photo: seun sanni/Reuters

Bitcoin surged above $20,000 on Wednesday for the first time in its 11-year history, part of a furious rally that has seen the digital currency double since September.

It most recently was up 5.4% at $20,501, according to CoinDesk, and earlier traded as high as $20,789.58.

The move above $20,000 is the latest bullish sign for cryptocurrencies, which after years of operating in the fringe are beginning to be taken more seriously by professional investors.

A string of well-known investors and companies have publicly unveiled bitcoin holdings this year, including hedge-fund managers

Paul Tudor Jones
and

Stanley Druckenmiller,
insurance giant MassMutual and other companies including
Square Inc.
and
MicroStrategy Inc.

The record came after the U.K. investment firm Ruffer Investment Management disclosed that it was holding about $744 million of bitcoin.

Bitcoin is also attracting a new crowd of individual investors. Firms such as Robinhood Markets Inc., Square,
PayPal Holdings Inc.
and Webull have opened up crypto trading to their customers, making it far easier for new investors to invest.

These new investors are driving the price higher at least partially for the same reason other assets are rising: the falling value of the U.S. dollar. With the Federal Reserve driving down interest rates and indicating it will let inflation run hot for years, investors are looking for alternative assets that can operate as a hedge.

Bitcoin, for all its volatility, has been touted as a dollar hedge by its supporters, though that status has yet to be proved.

Bitcoin hit an intraday high of $19,921 on Dec. 1 but had languished for the past two weeks until Wednesday morning’s spike, which came around 8:30 a.m. ET.

So far this year, bitcoin is up about 184%, which is far above the returns for most traditional assets. But in the crypto sector, it isn’t even the top performer among the major crypto assets. Ether, the in-house currency of the Ethereum network, is up nearly 360% in the year to date.

On Wednesday, ether was up 6% at $620.

Bitcoin’s rise has fueled interest from traditional exchange operators, which hope to introduce new markets for products linked to cryptocurrencies in a bid to win business from institutional investors.

Exchange giant
CME Group Inc.
said Wednesday that it was launching futures contracts on ether, the second-largest digital currency after bitcoin. Futures are derivatives contracts that track other markets ranging from oil to wheat to the S&P 500. Traders will be able to use CME’s ether futures to bet on anticipated increases or decreases in the digital currency or to protect themselves against adverse price moves.

CME’s ether contracts are set to begin trading in February, pending regulatory review. The announcement comes nearly three years to the day after the Chicago-based exchange giant commenced trading in bitcoin futures, a launch that came at the peak of the 2017 frenzy in bitcoin. Ether would be only the second cryptocurrency to have a futures contract at CME.

Earlier this week, CME’s crosstown rival
Cboe Global Markets Inc.
also indicated that it was dipping its toe back into cryptocurrencies, a reversal after it abandoned its own struggling bitcoin-futures contract last year. Cboe said it was partnering with CoinRoutes, a software firm that offers trading tools for digital assets, to disseminate data on cryptocurrency markets to Cboe clients.

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Write to Paul Vigna at paul.vigna@wsj.com

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