Virtual currency bitcoin soars to record high above $6,000
NEW YORK (Reuters) – Bitcoin surged to a record high of more than $6,000 on Friday, pushing its market capitalization to $100 billion at one point, as investors continued to bet on an asset that has a limited supply and has paved the way for a whole slew of cryptocurrencies.
The original virtual currency has gained more than 500% this year, better than any other tradable asset class. But bitcoin is very volatile – posting gains and losses as high as 26% and 16%, respectively, on any given day.
On Friday, bitcoin hit a record peak $6,000.10 on the BitStamp platform and was last at $5,964.24, up 4.7% on the day.
Bitcoin is a digital currency that can either be held as an investment or used as a foundation for future applications through the blockchain, its underlying technology. The blockchain is a digital ledger of transactions.
It is more scarce though than most people realize. The number of bitcoins in existence is not believed to exceed 21 million.
Analysts said it was a combination of factors that drove Friday’s surge in price.
Charles Hayter, cofounder of data-analysis website Cryptocompare in London, said hopes that China will soften its regulatory stance on cryptocurrencies helped bitcoin’s cause. “As China... fears fade, the price is unlocked and driven by demand and buyers entering the markets,” he said.
Over the summer, China banned the practice of raising capital through the sale of tokens to the public in what is known as initial coin offerings (ICOs). It also ordered the shutdown of digital-currency exchanges.
But many in the market believe the Chinese ban is temporary.
“China would not want to be left out of the digital-currency market nor the development of blockchain applications in general,” said Jason English, vice president of protocol marketing at Sweetbridge, a global alliance in Zug, Switzerland, that aims to use blockchain to create a liquid supply chain.
“As much as 60% of the world’s bitcoin mining is happening in China, and therefore, many of the large... investments in ICO projects have also been coming from cryptocurrency holders in China, whether directly or indirectly,” he said.
Sean Walsh, a partner at venture-capital firm Redwood City Ventures in Redwood City, California, believes investors have been going back into bitcoin given the still uncertain global regulatory environment for cryptocurrencies.
A big part of bitcoin’s recent surge was the ICO craze, which exploded this year. Bitcoins and ether, another digital currency, are used to purchase tokens for ICOs.