The virtual currency bitcoin celebrated the new year by rising through the $1,000 mark.
On Sunday, when most traders around the world were enjoying a day of rest, the digital currency, which trades on weekdays and weekends, crossed the line just before 4 p.m. New York time.
Tuesday, as capital markets reopened, bitcoin rose a bit more to about $1,022, according to CoinDesk. that built on a gain of about 123% in 2016 that lapped most stocks, bonds and commodities.
A digital currency maintained by a decentralized network of computers, bitcoin has been surging behind an increase in geopolitical uncertainty and budding fears about inflation.
The currency had faded from the public eye through early 2016 as prices stalled and traders battled about the structure of the approximately eight-year old market.
Now, with trading volumes rising sharply and some countries such as India making large cash payments more difficult, higher demand has pushed the bitcoin price up. Supply constraints forced by bitcoin’s algorithm of gradually slowing creation of new coins also played a role.
Professional funds and traders have responded by building up their presence trading bitcoin. That can support the price and reduce volatility. Cumberland Mining, a unit of market-making giant DRW Holdings LLC that focuses on bitcoin, had just started a pilot in 2013, as bitcoin spiked to its high above $1,100 before crashing back to $200.
Now, says Cumberland trader Bobby Cho, the firm is fully up and running and has counterparties in 20 countries. “In this market, more decentralized and fragmented is great,” he said
Read more at The Wall Street Journal.