Bitcoin tops $50,000 record mark, acceptance gathers pace
DUBAI: Bitcoin topped $50,000 on Tuesday to an all-time high, adding steam to a rally fuelled by signs that the world’s biggest cryptocurrency is gaining acceptance among mainstream investors and companies.
Bitcoin hit a record $50,602, and was last up 2.7% at $49,100. It has risen around 70% so far this year, with most of the gains coming ater electric carmaker Tesla said it had bought $1.5 billion in bitcoin.
The move by Tesla, which also said it would accept bitcoin as payment, was the latest in a string of large investments that have vaulted bitcoin from the fringes of finance to company balance sheets and Wall Street, with U.S. firms and traditional money managers starting to buy the coin.
Such mainstream moves, some investors said, could help bitcoin become a widespread means of payment — something it has so far failed to achieve at any large scale — and in turn further bolster prices.
“The more people that adapt it and use it as money, then the greater the chances of it perhaps being taken on board as a mainstream currency,” said Russ Mould, investment director of AJ Bell. “That would feed further speculative interest.”
The rush in 2021 by retail and institutional investors comes on top of a 300% rise last year as investors searched for high-yielding assets and alternatives the dollar amid rock-botom or even negative interest rates across the globe.
Bitcoin’s rise “blows the doors off prior bubbles,” Bofa said last month.
Even as bitcoin laps into the mainstream, cryptocurrencies remain subject to patchy oversight around the world, with the lack of regulatory clarity and associations with crime keeping many larger investors leery of exposure.
US Treasury Secretary Janet Yellen and European Central Bank President Christine Lagarde both called last month for tighter oversight of bitcoin due to concerns over its use for criminal activities such as money laundering.
Some believe the extreme volatility is a cause for concern.
“We feel that, due to its volatility, bitcoin lacks many of the established qualities that make up ‘money’, such as being a stable store of value and unit of account,” said George Lagarias, chief economist at Mazars.
Also boosting bitcoin’s rise have been analyst suggestions that its limited supply of 21 million could boost further gains for the virtual asset.
A narrative of bitcoin becoming “digital gold” has gained traction as investors predict looming inflation with central banks and governments opening the stimulus taps to counter COVID-19.
St. Louis Federal Reserve President James Bullard told CNBC in an interview on Tuesday that bitcoin’s claim to be 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 conduct their investments in that currency,” he said. “It’s very hard to get a private currency — it’s really 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 established as a safe-haven asset.
“The fundamental view that bitcoin as a viable store of value amongst investors and as a treasury asset for corporations is continuing to gain traction,” said James Buterfill, investment strategist at digital asset manager Coinshares.
Meanwhile, Africa Digital Finance Summit’s inaugural event themed “Decentralized finance, our pathway to financial freedom” will bring together regulators, African central banks, businesses, known crypto whales, and decision-makers across the world, to rethink the development trajectory of Africa’s finance ecosystem.
This year’s conference will put a spotlight on Blockchain’s continued transformation from hype to the mainstream. A roster of high-profile speakers will take the stage to explore avenues for Blockchain’s increased adoption, particularly as tech and payment giants Twiter, Paypal, and Facebook make significant investments in the space. The summit comes at a time when Jack Dorsey, CEO of Twiter, has taken steps to deepen engagement with Africa, by creating a trust with 500 Bitcoin. Tesla, currently the world’s most valuable car company, has also announced its entry into the cryptocurrency ecosystem, effectively forging the path to the universal acceptance of digital currencies.
Khurram Shroff, a Dubai-based Chairman of the IBC group will speak at the event, to highlight the opportunities in Blockchain and crypto, which can be leveraged for accelerated development in the African finance sector. “As Blockchain technology matures, we are witnessing a vigorous development of robust, enterpriseready solutions” expressed Mr. Shroff, “The Africa Digital Finance Summit will bring together innovators, early adopters and application leaders, to explore how organisations can leverage decentralised finance, to enable more seamless business operations in Africa.”
Meanwhile, smaller cryptocurrency ethereum edged 1.5% higher, just shy of its record high price of $1,874.98.