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May 2, 2020, 10:34 a.m. EDT

Don’t look now—much-maligned bitcoin is outperforming gold and bullish investors are eyeing $10,000 and beyond

The so-called bitcoin halving is on May 12

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By Mark DeCambre, MarketWatch

Bitcoin is on the rise lately amid the coronavirus pandemic that has rocked financial markets world-wide.

The world’s most prominent digital currency has been enjoying a run-up of late, managing to outperform gold prices /zigman2/quotes/210034565/delayed GC00 -0.67% /zigman2/quotes/211755585/delayed GC.1 -0.64% in the last 12 months, perhaps bolstering claims by rabid cryptocurrency bulls that proclaim bitcoin a viable store of value.

Bitcoin prices /zigman2/quotes/211755589/delayed BTC.1 -0.56% are at $8,840, at last check, and had been up at an intraday high at $9.150 trading on the CME Group’s /zigman2/quotes/210449693/composite CME +1.74% exchange, according to FactSet data.

So far this year, bitcoin is up 23%, while gold futures, based on the most-active contract are up 12.3% at $1,709 an ounce. Over the course of the past 12 months, however, the divergence between the venerable yellow metal, which is widely viewed as a haven asset in times of crisis, is even starker compared against bitcoin’s rise of 67%, versus 33% for bullion over the same period.

It is hard to know if bitcoin /zigman2/quotes/31322028/realtime BTCUSD +0.79% , a virtual asset that was born in 2009, in the aftermath of the 2008 financial crisis, will see its gains sustained, or even if prices will extend beyond $10,000.

“Bitcoin may have a couple more attempts at breaking back towards the psychological $10,000 level, but right now it seems the fundamentals could easily support that,” wrote Edward Moya, senior market analyst at Oanda, in a Thursday note.

However, some optimistic investors are wagering that it could hit a five-digit value in the near future.

Some are pointing to the so-called halving, as a catalyst for bitcoin’s recent rally. The halving refers to bitcoin’s software underpinnings. Those who support the digital-ledger technology, or blockchain, are rewarded with bitcoins every 10 minutes for expending massive amounts of computing power, that reward will be cut from 12.5 to 6.25 coins. A halving occurs every four years and this event would mark only the third time since the cryptoasset was engineered 11 years ago.

No more than 21 million bitcoins will ever be in circulation and currently there are about 18.355 million bitcoins in existence, according to digital site CoinMarketCap.com .

“We’re bullish over the next 12 months and expect prices may continue moving up into the [halving] and possibly after,” wrote David Grider lead digital strategist at Fundstrat in a Thursday report. Fundstrat’s 12-month outlook for bitcoin is $14,350. Meanwhile, bullish analysts at Bank of America raised their price target for gold to $3,000 from $2,000.

Read: Gold $3,000? This pattern suggests a 70% surge from here makes sense

Bitcoin has had its time in the sun before, surging to a price near $20,000 in late 2017 before notoriously flaming out.

Champions of bitcoin have regularly pit the virtual asset against gold, which touts thousands of years of history as a haven asset.

Nicholas Colas, co-founder of DataTrek Research in a Friday note says that beyond the halving, which can attract bullish investments, bitcoin may be benefiting from shutdown protocols that are in place to slow down the spread of COVID-19.

“The other explanation: as with stocks, which have seen a lot of retail interest lately, bitcoin trading may just be a temporary substitute for gaming and sports betting,” he wrote.

It isn’t clear if that is a good reason to be a buyer of bitcoin over gold but the novel asset’s staying power during this crisis has been notable.

/zigman2/quotes/210034565/delayed
US : U.S.: Nymex
$ 1,864.30
-12.60 -0.67%
Volume: 226,076
Sept. 25, 2020 4:59p
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/zigman2/quotes/211755585/delayed
US : U.S.: Nymex
$ 1,856.30
-12.00 -0.64%
Volume: 4.00
Sept. 25, 2020 9:42a
loading...
/zigman2/quotes/211755589/delayed
US : U.S.: CME
$ 10,610.00
-60.00 -0.56%
Volume: 1,056
Sept. 25, 2020 9:59a
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/zigman2/quotes/210449693/composite
US : U.S.: Nasdaq
$ 166.78
+2.85 +1.74%
Volume: 1.34M
Sept. 25, 2020 4:00p
P/E Ratio
25.17
Dividend Yield
2.04%
Market Cap
$59.81 billion
Rev. per Employee
$960,349
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/zigman2/quotes/31322028/realtime
US : CoinDesk
10,797.99
+84.91 +0.79%
Volume: 0.00
Sept. 26, 2020 1:52a
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Mark DeCambre is MarketWatch's markets editor. He is based in New York. Follow him on Twitter @mdecambre.

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