Bitcoin hit $19,000 on Tuesday for the first time in nearly three years and was just shy touching an all-time high of just under $20,000.
The world’s most popular cryptocurrency has gained around 160% this year, fuelled by a demand for risk-on assets amid unprecedented fiscal and monetary stimulus, hunger for assets perceived as resistant to inflation, and expectations that cryptocurrencies would win mainstream acceptance.
Bitcoin has gained over 37% in November alone.
Bitcoin relies on so-called “mining” computers that validate blocks of transactions by competing to solve mathematical puzzles every 10 minutes. The first to solve the puzzle and clear the transaction is rewarded new bitcoins.
Its technology was designed to cut the reward for miners in half every four years, a move meant to curb inflation. In May, bitcoin went through a third “halving,” which reduced the rate at which new coins are created, restricting supply.
That halving has kickstarted bitcoin’s renewed ascent.
Square’s Cash App and PayPal, which recently launched a crypto service to its more than 300 million users, have been scooping up all new bitcoins, hedge fund Pantera Capital said in its letter to investors on Friday. That has caused a bitcoin shortage and has driven the rally in the last few weeks.