Bitcoin prices surged 5% on Wednesday, outpacing stocks and gold amid calls for more government stimulus, as the economic toll of the coronavirus mounts.
The oldest and largest cryptocurrency rose to $11,755. The price is now approaching $12,000 for the second time in a week, a level that bitcoin hasn’t sustainably traded above for more than a year.
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Bloomberg News went so far as to declare in an article Wednesday that “bitcoin mania appears to be almost back in full bloom.”
Bitcoin is seen by many digital-asset investors as a hedge against inflation, and the bets are growing that governments and central banks will have to pump trillions of dollars more into the financial system to stimulate the economy out of the worst recession since the 1930s.
Gold, historically seen as a reliable inflation hedge, surged this week to a new record above $2,000.
Yet even gold’s 35% gain this year is no match for bitcoin’s 63% price increase. The Standard & Poor’s 500 Index is now up 3% on the year, with some traditional investors arguing that stocks have become detached from reality, merely propped up by the roughly $3 trillion of freshly created money that the Federal Reserve has pumped into the global financial system this year.
“Bitcoin and the crypto markets are once again able to claim independence from the traditional markets,” Mati Greenspan, co-founder of the foreign-exchange and cryptocurrency analysis firm Quantum Economics, wrote Wednesday in a newsletter.
The U.S. government’s budget deficit this fiscal year…