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. 

You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here. 

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 is projected to soar to $3.7 trillion, far surpassing the previous record of $1.4 trillion in 2009, according to the Associated Press. 

An extra $600-per-week federal benefit for laid-off workers lapsed last week, threatening the economic recovery, and U.S. lawmakers are wrangling over the details of a new spending measure that could range from $1 trillion to more than $3 trillion.  

"Bitcoin’s long-term value proposition as a hedge against fiat currency debasement only grows stronger," Anil Lulla, of cryptocurrency research firm Delphi Digital, noted Wednesday in an op-ed for CoinDesk.

The International Monetary Fund warned this week in a blog post that "another bout of global financial stress could trigger more capital flow reversals, currency pressures and further raise the risk of an external crisis for economies with preexisting vulnerabilities, such as large current account deficits."

All that just plays to bitcoin's strengths, as more investors start to extrapolate the likely stimulus needed to recover from a protracted economic downturn. According Bloomberg News, analysts for the U.S. bank JPMorgan wrote Tuesday that while older investors are buying gold, younger investors are buying bitcoin. 

The analysis firm Coin Metrics noted that over the past week bitcoin had averaged over 1 million daily active addresses for the first time since January 2018. That was in the wake of the cryptocurrency hitting an all-time high around $20,000 in 2017. 

And Norwegian cryptocurrency-analysis firm Arcane Research noted in a report this week that bitcoin daily trading volumes have been "growing strongly," with several days topping $2 billion. The number of open bitcoin futures contracts on the CME exchange has jumped to a new record around $850 million.  

"The strong momentum in the market continues," Arcane wrote. "The sharp rise in open interest at CME is a clear indication of increased institutional demand for bitcoin."

Chris Thomas, head of digital assets for broker Swissquote, told CoinDesk's Daniel Cawrey on Wednesday that bitcoin could break past $12,000 by Friday. 

The signs certainly appear to be pointing in that direction. 

BTC: Price: $11,700 (BPI) | 24-Hr High: $11,807 | 24-Hr Low: $11,380

Trend: Bitcoin is looking north after twin bullish cues were activated by a 5% rally Wednesday. 

Firstly, with the UTC close at $11,755, bitcoin marked an upside break of a narrowing price range witnessed Monday and Tuesday. 

In addition, Wednesday’s UTC close established a strong foothold above $11,400. The bulls had repeatedly failed to keep gains above that level on Monday and Tuesday. 

The combination of range breakout and convincing move above a key hurdle has opened the doors for a re-test of recent highs above $12,100.

Still, the case for a rally to recent highs would only weaken if prices fall back below the former hurdle-turned-support of $11,400. At press time, bitcoin is changing hands near $11,700.