Bit­coin breaches new mile­stone by smash­ing past $5,000 mark

Business Standard - - COMMODITIES - TUGCE OZ­SOY & NATASHA DOFF BLOOMBERG

Bit­coin surged to a fresh record Thurs­day as the en­thu­si­asm for cryp­tocur­ren­cies showed lit­tle sign of abat­ing.

The world’s largest cryp­tocur­rency rose as much as 8.4 per cent and was trad­ing 7.9 per cent higher at $5,209 as of 12:34 pm in Lon­don, re­sum­ing gains af­ter a one-day break. As re­cently as De­cem­ber, bit­coin was trad­ing at less than $1,000 dol­lars.

Bit­coin tum­bled be­low $4,000 last month af­ter China’s cen­tral bank banned ini­tial coin of­fer­ings and or­dered all cryp­tocur­rency ex­changes to close.

Re­cent re­ports that Gold­man Sachs Group Inc. is ex­plor­ing how it could help its clients trade cryp­tocur­ren­cies are now help­ing sen­ti­ment.

“Ev­ery­one seemed to agree that once it broke through $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.”

The dig­i­tal cur­rency’s 440 per cent surge this year has di­vided the fi­nan­cial com­mu­nity between those con­vinced it is a bub­ble on the verge of pop­ping and those look­ing for ways to pig­gy­back on its suc­cess. Gold­man Sachs is in talks with cryp­tocur­rency ex­perts but hasn’t yet for­mu­lated a busi­ness plan, a timetable for im­ple­men­ta­tion or made any bit­coin­re­lated in­vest­ments, a per­son briefed on the plan said ear­lier this month.

What hap­pens from here de­pends a lot on how gov­ern­ments de­cide to reg­u­late the vir­tual cur­rency, Kenneth Ro­goff, pro­fes­sor of eco­nomics and pub­lic pol­icy at Har­vard Univer­sity, wrote in a col­umn pub­lished in Project Syn­di­cate this week. Global ef­forts to reg­u­late dig­i­tal money have ac­cel­er­ated in the past month since China’s ban.

At least 13 other coun­tries have im­posed new rules or an­nounced plans to tighten reg­u­la­tions. Rus­sian Pres­i­dent Vladimir Putin this week called for reg­u­la­tion of cryp­tocur­ren­cies, but stopped short of back­ing a broad ban.

“It’s a very spec­u­la­tive mar­ket,” Jon Moul­ton, a UK-based pri­vate eq­uity vet­eran who owns bit­coins, said in an in­ter­view with Bloomberg TV’s Francine Lac­qua. “It’s go­ing to be a very volatile as­set for a long time.”

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