Bitcoin breaks through $US120,000 to fresh high but some warn 'bubble' could burst
Analysts say the cryptocurrency's recent rise has been driven by support from the Trump administration and US regulators.
The price has climbed alongside its standing among mainstream investors.
AMP's head of investment strategy Shane Oliver, who helps manage billions of dollars in superannuation funds, was a cryptocurrency sceptic.
However, he and his team decided they could no longer ignore the rise of bitcoin, and bought a "very small exposure" on behalf of investors.
"We're aware that yes, there's lots of upside, but it's also quite volatile… so we manage it quite closely," Dr Oliver said.
Former equities analyst Andrew Page, now a private investor and facilitator of an online investment research forum, understands the risks of bitcoin.
"Everyone's instincts on this are correct … if you don't come across this and think it's crazy, then there's something wrong with you."
But that didn't stop him from buying the cryptocurrency, which he has concluded is a legitimate "alternative investment".
He said using bitcoin as a store of his wealth helped him buy his house, and he has used it to transact as well, with more merchants accepting it, particularly online.
The original cryptocurrency, bitcoin, was pitched as a form of payment outside the control of any one person, group or entity, as it is exchanged without the need for a financial intermediary.
Transactions are recorded on a decentralised global ledger, rather than a ledger of a financial institution.
It can also be bought and sold on licensed exchanges.
In another milestone in bitcoin's march towards the mainstream, it has been taken up by the exchange traded funds (ETF) industry.
ETFs pool investments and give investors exposure to particular asset classes or indices without them having to buy the underlying asset themselves.
Rachael Lucas, an analyst at Australian crypto exchange BTC Markets, said the recent rally was a sign of "how deeply embedded digital assets have become in institutional portfolios".
"Daily inflows into spot bitcoin ETFs topped $US1 billion ($1.5 billion), and total ETF-managed bitcoin now represents over 6 per cent of the entire [ETF] market capitalisation," she said.
"It used to be in the Wild West, very volatile, lots of cowboys, lots of upsets, hacks, and all sorts of problems with the crypto exchanges … it's now moving to some degree into the mainstream," Dr Oliver noted.
While Dr Oliver has set aside some of his bitcoin scepticism, he maintains the cryptocurrency needs to be managed "very carefully" due to its volatility.
"It does tend to have these big falls every four years, but over time I suspect that as it gains acceptance then it probably has a lot more upside to it," Dr Oliver said.
Bitcoin's latest surge in price coincided with the 2024 US presidential election. It was hovering around the $US60,000 level up until election day, and by late November, it had really started to take off.
Donald Trump promised to be a pro-cryptocurrency president, and Dr Oliver said he'd delivered.
Veteran financial market strategist Sean Callow has spent a lot of time looking at currency market moves and described bitcoin as "moving with a lot of speculative force".
"That sort of price action does worry me," said Mr Callow, senior FX analyst at InTouch.
He remains a bitcoin sceptic and sees potential for a bubble — that is, a rapid run-up in price, followed by a sharp decline when the bubble bursts.
"I do think it's on a sounder footing than it was a year or two ago in terms of involvement from different types of investors … [that would] potentially limit the downside.
While Andrew Page has financial exposure to bitcoin, he also concedes there are risks. But as a seasoned investor, he's seen plenty of bubbles and bitcoin doesn't fit the mould.
"It's unusual in the fact that every time it crashes, it crashes to a level that's at least 10 times higher than where it began, and then it's gone on to create a new all-time high.
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