Bitcoin not slowing down, tops US$52,000
Bitcoin's incredible rally shows little sign of abating yet after the token jumped past US$52,000 for the first time.
The largest cryptocurrency rose as much as 7.7 per cent in New York Wednesday to about US$52,332 after a fivefold surge in the past year, based on prices Bloomberg compiled. It hit US$50,000 Tuesday for the first time.
Bitcoin's rally for some is emblematic of speculative froth in financial markets awash with stimulus. The crypto faithful counter that the digital asset is grabbing more mainstream attention, especially after Tesla Inc.'s recent US$1.5-billion purchase. MicroStrategy Inc. boosted its convertible debt sale to buy Bitcoin by nearly half to US$900 million and cut the coupon to zero per cent, making it virtually a straight bet on the price of the cryptocurrency.
MicroStrategy's step is “a warning sign if there ever was one that things are getting out of hand in the crypto world,” Jeffrey Halley, a senior market analyst at Oanda Asia Pacific Pte, wrote in emailed comments.
Others take a different view, contending that demand from institutional investors and companies is set to expand, driving further gains.
“There are a number of reasons why Bitcoin is soaring, but what stands out most is the trend that MicroStrategy started and Tesla popularized: moving institutional balance sheets into Bitcoin to hedge against inflation,” said Nicholas Pelecanos, head of trading at NEM.
Activity in Bitcoin futures suggests traders don't see a sudden end to the crypto rally, with spreads continuing to widen between the active contract and March futures, according to data compiled by Bloomberg.