Bitcoin rockets to all-time $7k high
Bitcoin has smashed through the US$5000 (NZ$7000) barrier for the first time, jumping as much as 8 per cent as investors shrugged off the latest warnings on the risks of buying into the booming cryptocurrency market.
Bitcoin, the biggest and bestknown cryptocurrency, has chalked up a more than fivefold increase in price this year.
Typically for bitcoin, which at less than 9 years old is still highly volatile and illiquid compared with traditional currencies and assets, the precise reason for its recent tear was unclear.
Upcoming splits in its software, reports that Goldman Sachs is considering offering bitcoin trading, rumours that China could ease restrictions, and even a political crisis in Spain’s Catalonia region were all cited by market-watchers as reasons for the rally.
But the main factor could simply be demand from investors wanting in on a market that has provided gains exceeding those of any other currency in every year bar one since 2010.
‘‘People are just wanting to be part of it,’’ said Ryan Nettles, head of FX trading and market strategy at Swiss bank Swissquote, which launched bitcoin trading two months ago.
Nettles said interest had been much higher than anticipated and has come from banks, hedge funds and brokers. ‘‘The interest really stems from the media hype.’’
On Wednesday (Thursday, NZ time), Russian President Vladimir Putin warned of the ‘‘serious risks’’ surrounding the nascent market, while Russia’s central bank said it would ban cryptocurrency trading websites.
But that was not enough to put investors off, with bitcoin rallying around 10 per cent since then.
Data released last week from SEMrush, a search engine data analytics firm, found the price had a 91 per cent correlation with Google searches on bitcoin, suggesting that all news drives up demand, even if bad news can have a temporary negative effect.
Bitcoin almost reached US$5000 at the start of September, but fell back sharply after the head of Goldman Sachs blasted the cryptocurrency as a ‘‘fraud’’ and as China forced exchanges to close down, sparking fears of a broader crackdown.
After dipping below US$3000 in mid-September, bitcoin has leapt in value by more than 75 per cent in four weeks.
‘‘Bitcoin was designed to operate outside of the influence of governments and central banks, and is doing exactly that,’’ said Iqbal Gandham, managing director at retail trading app eToro. –Reuters