Bitcoin’s wild price swings resumed after the world’s largest cryptocurrency for the first time climbed above US$40,000.
After jumping as much as 11 percent to US$40,394, bitcoin fell about US$3,500 in about half an hour and continues to fluctuate. Prices vacillated as much as 17 percent on Monday, after the digital token has more than doubled in less than a month.
Strategists have cited demand from speculative retail traders, trend-following quantitative funds, the rich and even institutional investors as among the reasons for the surge. The total market value of cryptocurrencies on Thursday climbed beyond US$1 trillion for the first time.
Photo: AFP
“Bitcoin continues to defy all expectations and doubters,” said Antoni Trenchev, cofounder and managing partner of Nexo, a cryptocurrency lender. “It’s leaving all other assets trailing in its wake, like it’s done year in, year out for the past decade.”
Bitcoin accounts for about two-thirds of cryptocurrency market value, followed by Ether at about 13 percent, CoinGecko data showed.
Coinbase Inc, the largest US digital exchange, said it is for a second day experiencing “connectivity issues” on its Web site and mobile app.
Digital coins are jumping in a world awash with fiscal and monetary stimulus, even as some commentators fear an inevitable bust and others question the basic integrity of cryptocurrency markets.
Proponents of bitcoin argue that it offers a hedge against US dollar weakness and the risk of faster inflation, similar to gold, while critics decry the intellectual soundness of comparing the two assets.
“The more that people perceive that their assets, particularly their liquid assets such as fiat currencies are eroding in value, the more they will look for alternatives,” said Geoffrey Morphy, president of Bitfarms Ltd, a Canadian cryptocurrency mining company.
Active bitcoin accounts are nearing their all-time high levels of late 2017, according to researcher Flipside Crypto — possibly a sign that some holders are planning to sell.
Fewer than 2 percent of accounts hold 95 percent of bitcoin supply, so a few big trades can impact prices. The last big bitcoin boom began imploding in late 2017.
Some traders pointed to JPMorgan Chase & Co’s long-term bitcoin price forecast of US$146,000 as possibly fueling the rally. Others said that sentiment was boosted by a US regulatory update that allows a class of less volatile coins to be used by banks for payments.
“This parabolic move upwards, with normally staid Wall Street firms including JP Morgan calling US$146,000 as their price target for Bitcoin, and Guggenheim called US$400,000, feels like it has a long way to go before exhausting,” eToro US managing director Guy Hirsch said. “It wouldn’t be all that surprising to see US$100,000 at some point this year, given the current momentum.”
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