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Bitcoin hit a record high of $ 50,603 and was up 0.83 percent to $ 48,351.
Bitcoin surged above $ 50,000 on Tuesday for the first time, adding strength to a rally fueled by signs that the world’s largest cryptocurrency is gaining acceptance among major investors and businesses.
Bitcoin hit a record high of $ 50,603 and was up 0.83 percent to $ 48,351. It is up about 67 percent year-to-date, with most of the gains coming after electric car maker Tesla said it had bought $ 1.5 billion worth of bitcoin.
The move by Tesla, which also said it would accept bitcoins as payment, was the latest in a series of large investments that have taken bitcoin from the periphery of finance to the balance sheets of companies and Wall Street, with American companies and managers of Traditional money starting to buy the currency.
“The bitcoin rally reflects in part the recent buoyancy in market sentiment, but also headlines suggesting an increase in business acceptability,” said Jane Foley, Rabobank’s Head of FX Strategy.
Evolve Funds Group said on Tuesday that it had applied to launch a Bitcoin exchange-traded fund on the Toronto Stock Exchange. That would be the second bitcoin ETF planned after Canada’s top securities regulator approved a fund from Purpose Investments Inc.
Such conventional moves could help Bitcoin become a widespread means of payment, which has so far failed to achieve large-scale adoption, and in turn, drive prices.
“The more people adopt it and use it as money, the greater the chances that it might be accepted as common currency,” said Russ Mold, chief investment officer at AJ Bell. “That would fuel more speculative interest.”
The rush in 2021 by retail and institutional investors adds to a 300 percent increase last year as investors sought high-yielding assets and dollar alternatives amid low or even negative interest rates at the level. world.
The meteoric rise of bitcoin, which was trading at a few hundred dollars just five years earlier, has also prompted major investment banks to warn of a speculative bubble.
Bitcoin’s surge “blows the doors off the previous bubbles,” BofA said last month.
Despite widespread interest, cryptocurrencies remain subject to spotty oversight globally, and a lack of regulatory clarity and associations with crime keep many larger investors wary of exposure.
US Treasury Secretary Janet Yellen and European Central Bank President Christine Lagarde have called for stricter oversight of bitcoin.
Some believe that extreme volatility is cause for concern.
“Due to its volatility, bitcoin lacks many of the established qualities that make up ‘money,’ such as being a stable store of value and a unit of account,” said George Lagarias, chief economist at Mazars.
Digital gold?
Suggestions that its limited supply of 21 million could generate more profit for the virtual asset are also prompted by bitcoin.
A narrative of bitcoin turning into “digital gold” has gained traction as investors predict impending inflation amid massive stimulus from the central bank and the government to counter COVID-19.
St. Louis Federal Reserve Chairman James Bullard told CNBC on Tuesday that bitcoin’s claim to be a rival to gold would not threaten the dollar’s dominance.
“Investors want a safe haven, they want a stable store value and then they want to make their investments in that currency,” he said. “It is very difficult to get a private currency, it is actually more like gold, to play that role.”
JPMorgan said in January that Bitcoin emerged as a rival to gold and could trade as high as $ 146,000 if it becomes an established safe haven.
American business intelligence software firm MicroStrategy Inc, whose CEO is a strong bitcoin advocate, said Tuesday that it would issue $ 600 million in convertible notes to buy additional bitcoins.
Meanwhile, the smaller cryptocurrency ethereum fell 2.42 percent, having previously risen to $ 1,826, just shy of its record price of $ 1,875.
Since cryptocurrencies are collectively worth around $ 1.5 trillion, some investors are warning about the value of owning them.
“As an intangible asset with no performance or practical use, except for some organizations that accept it as payment, it is really only the demand (against a predictable supply) that determines its price,” said Lagarias de Mazars.
“But while the price of bitcoin has skyrocketed, the value you get from holding it in a long-term portfolio is still the subject of much debate.”
