Bitcoin rockets above $11,000 to year highs as the dollar weakens

• Bitcoin crossed the $11,000 level and traded near its highest level in nearly a year on Tuesday amid US dollar weakness and a broad shift to alternative assets.
• The token leaped as high as $11,198.32 before paring gains and trading below $11,000 later in the day.
• Cryptocurrency advocates argue digital tokens including bitcoin can one day replace the dollar and currently serve as a strong hedge against inflation.
• Bitcoin's rally comes amid a similar upswing for gold prices. The precious metal reached a record high on Monday as investors bet on heightened inflation expectations.
• Watch bitcoin trade live here.

Bitcoin crossed the $11,000 mark in early Tuesday trading as the US dollar tumbled and investors turned to alternative assets including gold.

The cryptocurrency surged as high as $11,198.32 Tuesday before paring some gains and trading just below $11,000 per coin at 8 a.m. ET. Bitcoin is up roughly 52% year-to-date and about 23% since the start of July.

The token spiked higher on Monday after crossing the $10,000 level for the first time since June. Prices leaped as high as $11,298.22 late Monday evening to hit their highest in nearly a year.

Naeem Aslam, chief market analyst at AvaTrade, said the bounce "cleared a major psychological level that has been there for a long time," adding the next key resistance level for the digital coin is $15,000.

Read more: GOLDMAN SACHS: Buy these 26 stocks now to crush the market as an 'overvalued' dollar continues to weaken in the months ahead

The rally was helped by a growing argument among bitcoin bulls that the cryptocurrency can replace traditional stores of value. The dollar is down significantly year-to-date amid record levels of economic relief spending.

Gold, on the other hand, settled near record highs on Tuesday as the dollar's weakness and heightened inflation expectations boosted the precious metal. Crypto fans have repeatedly touted bitcoin as a similar kind of hedging asset, as it isn't directly tied to inflation and interest rates.

Other cryptocurrencies jumped early Tuesday before erasing gains and trading largely unchanged. Ethereum slipped after reaching its highest level in more than a year. Tether posted modest gains after its market cap crept above the $10 billion threshold.

Bitcoin traded at $10,916.45 per coin as of 8:45 a.m. ET Tuesday.

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