But there’s some logic to the run-up: investors are pouring money into Bitcoin and other cryptocurrencies during the COVID-19 pandemic as the US Federal Reserve sent interest rates near zero (and expects to keep them there for several more years), severely weakening the US dollar.
That makes Bitcoin, comparatively, an attractive currency.
There’s a set limit to the number of Bitcoins on the planet, and investors believe that once the supply runs out, the digital coin’s value can only increase.
Also aiding in Bitcoin’s soaring valuation: big, name-brand investors are stockpiling it, and huge consumer companies are embracing it.
That’s adding a dose of validity and appeal to cryptocurrency for mainstream investors
For example, a top executive at BlackRock recently said the cryptocurrency can replace gold, and Square and PayPal have both embraced Bitcoin.
As Bitcoin surges to all-time highs, cryptocurrency brokerage Coinbase, the most prominent cryptocurrency exchange, has signalled its intent to go public.
Still, the recent cryptocurrency surge is showing signs of a melt-up – over-enthusiasm fuelled by the fear of missing out, not simply market fundamentals.
Take Elon Musk’s sarcastic tweet about Bitcoin rival Dogecoin last week: the digital coin, which itself was constructed as a cryptocurrency parody, shot up 20 per cent immediately after Mr Musk threw his support behind it on Twitter