UPDATE 1-Bitcoin rises to highest in four months

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LONDON, Jan 17 (Reuters) - Bitcoin on Tuesday rose to its highest in more than four months, extending a new year rally fuelled by hopes that a potential end to central bank policy tightening will benefit the volatile asset.

The world’s biggest cryptocurrency touched $21,594, a level not seen since Sept. 13. It was last flat at $21,174.

Bitcoin has gained almost 30% this year, buoyed in part by optimism that inflation has peaked, potentially reducing the need for tighter central bank policy.

Bitcoin and other crypto coins soared during the COVID-19 pandemic as central banks and governments unleashed massive fiscal and monetary stimulus packages. However a tightening of central bank credit hammered prices, triggering a string of corporate failures. (Reporting by Tom Wilson; editing by Alun John and Jason Neely)