It’s bitcoin mania as cryptocurrency surges past the US$5,000 mark
Bitcoin bubble or just the beginning? Or both? Those are the questions being asked on Wall Street to Main Street after the digital currency breached US$5,000 for the first time, pushing this year’s gains to more than fivefold.
As recently as December, bitcoin was trading at less than US$1,000. Since then, it has dodged everything from tightening regulations, feuding factions splitting its underlying blockchain and warnings from the likes of JPMorgan Chase chief executive Jamie Dimon of fraud and an eventual price collapse.
The latest leg higher is being driven in part by increasing institutional interest, with everyone from Goldman Sachs’s Lloyd Blankfein to Dimon saying they’re now open to ways to get involved. The change of heart comes amid growing optimism about the blockchain technology.
“This record is an exciting milestone and sign of market confidence in the outlook for bitcoin and the underlying technology,” said Iqbal Gandham, a managing director at eToro. “We expect many more milestones like this to come.”
Interest is growing by the day, as measured by searches on the internet. SEMrush, a data analytics firm, found the price had a 96-per-cent correlation with Google searches on bitcoin, suggesting that growing interest in the cryptocurrency is helping to drive demand.
Bitcoin fell below US$4,000 last month after China’s central bank banned initial coin offerings and ordered all cryptocurrency exchanges to close. Reports that the Chinese government will ease those regulations is also helping the price.
A rotation out of digital tokens sold in initial coin offerings and into bitcoin is providing an additional boost. Investors are becoming increasingly wary as projects with little substance have mushroomed, and as hacks and technical issues have caused some to lose thousands. There’s a Wu-Tang Coin with the sole purpose of buying and releasing the Wu-Tang Clan album bought by fraudster Martin Shkreli, while Paris Hilton and Floyd Mayweather publicized their ICO investments on social media. Bitcoin is seen as a crypto-safe haven next to many of these tokens.
“Everyone seemed to agree that once it broke through US$5,000, the sky is the limit. I wouldn’t be surprised to see it double from here in a very short space of time,” said Ben Kumar, a money manager at Seven Investment in London, who invests in bitcoin in an individual capacity. “There’s a long time to run before people get tired of chasing the next big thing.”
Bitcoin isn’t the only one to benefit as lately it seems that shares of any company with even an indirect link to the cryptocurrency space is bound to rally. Overstock.com soared after announcing a regulated digital tokens exchange, while Goldmoney climbed after saying