SYDNEY (BLOOMBERG) – Bitcoin soared to the highest level in a year, extending a run that’s seen prices more than double since March.
The largest cryptocurrency climbed as much as 10 per cent on Monday (May 27) from levels late Friday, and was trading at US$8,847 as of 10:25am in Tokyo. Rival coins were also stronger at the start of the week. Litecoin added almost 9 per cent and ether, the second largest digital token, rose 6 per cent.
Crypto proponents are taking encouragement from a string of recent headlines showing greater interest in the space from mainstream firms. Fidelity Investments is finalizing plans to buy and sell the digital asset for institutional customers, and E*Trade Financial Corp is poised to allow crypto trading. AT&T said it will permit customers to use payment processor BitPay to settle their online bills.
Bitcoin is up almost 70 per cent this month despite concerns from JPMorgan Chase & Co strategists that its price may have surged beyond its “intrinsic value” – a concept that not all agree applies to a digital currency.
“Easier to spend means a greater-use case and a greater level of adoption,” Mati Greenspan, senior market analyst at eToro, wrote in a note on Friday. “The tipping point is likely very close now.”
Bitcoin’s fantastic run this year follows a painful downtrend that lasted the majority of last year and saw the digital currency tumble more than 70 per cent. Bulls are betting the run could continue as more institutions start to build out their own cryptocurrencies or launch projects using the underlying blockchain technology.
“It takes two to tango. The more merchants that accept crypto encourages more people to adopt it and use it,” said David Tawil, president of crypto hedge fund ProChain Capital. “That’s major.”
But the crypto meltdown is still fresh on many investors’ minds and not everyone is betting digital assets will become as widely accepted as enthusiasts hope. There are signs the rally is running too hot, wrote Bloomberg Intelligence analyst Mike McGlone in a note. Crypto transactions, for instance, have been lagging the broader rally, indicating caution for additional price increases, he said.
“This is still the thawing out from the crypto winter that was,” said Tawil. “There still may be another pullback before we get to fundamentals truly taking over and speculators and frauds being expunged.”
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