Bitcoin Surges Past $5,000
$BTCUSD $JPM, $GS, $GOOGL
- Bitcoin’s surge has divided the financial community between those convinced it is a bubble on the verge of popping.
Questions being asked on Wall Street and Main Street about speculation on Bitcoin after the digital currency breached 5,000 for the 1st time, pushing this year’s gains to more than 5X, and currently trading at 5,290.28
Last December, Bitcoin was trading at less than 1,000.
Since then, it has dodged everything from tightening regulations, feuding factions splitting its underlying blockchain and warnings from the likes of JPMorgan’s (NYSE:JPM) CEOJamie Dimon of fraud and an eventual price collapse.
The latest move North is driven in part by increasing institutional interest, with everyone from Goldman Sachs Group’s (NYSE:GGS) Lloyd Blankfein to Mr. Dimon saying they are now open to ways to get involved.
The change of heart comes amid growing optimism about the blockchain technology.
Interest is growing by the day, as measured by searches on the Internet. A data analytics firm found the price had a 96% correlation with Google (NASDAQ:GOOGL)searches on Bitcoin, suggesting that growing interest in the cryptocurrency is helping to drive demand.
Bitcoin dipped below 4,000 last month after China’s central bank banned initial coin offerings and ordered all cryptocurrency exchanges to close. Reports that the Chinese government will ease those regulations is also helping the price.
A rotation out of digital tokens sold in initial coin offerings and into bitcoin is providing an additional boost. Investors are becoming increasingly wary as projects with little substance have mushroomed, and as hacks and technical issues have caused some to lose thousands.
There’s a Wu-Tang Coin with the sole purpose of buying and releasing the Wu-Tang Clan album bought by fraudster Martin Shkreli, while Paris Hilton and Floyd Mayweather publicized their ICO investments on social media.
Bitcoin is seen as a crypto-safe haven next to many of these tokens.
People seem 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, There’s a long time to run before people get tired of chasing the next big thing.
Bitcoin’s rally and the proliferation of other digital assets is attracting the wary eyes of regulators globally.
China and South Korea banned ICOs, while Russian President Vladimir Putin this week called for regulation of the sector. At least 13 other countries have imposed new rules or announced plans to tighten regulations.
This is a very speculative market, and Shayne and I believe it is going to be a very volatile asset for a long time.