FILE PHOTO: Representation of the bitcoin virtual currency standing on the PC motherboard is seen in this illustration picture, February 3, 2018. REUTERS/Dado Ruvic/Illustration/File Photo
LONDON (Reuters) - Bitcoin rose above $50,000 on Tuesday to a new record high, building on a rally fuelled by signs that the world's biggest cryptocurrency is gaining acceptance amongst mainstream investors.
COMMENTARY:
RUSS MOULD, INVESTMENT DIRECTOR, AJ BELL
"With Bank of NY Mellon and Mastercard having given it an affirmation in the last week, it's a massive step forward for the bitcoin investors who view it as the future of money.
"(Tesla boss Elon) Musk's intervention has created interest, and the more people that adapt it and use it as money, then the greater the chances of it perhaps being taken on board as a mainstream currency. That would feed further speculative interest at the same time.
"There is a risk of intervention (by central banks). The rules can be changed... But the more people start to use it and give it greater legitimacy, the harder it is for central banks to push back."
JOSEPH EDWARDS, HEAD OF RESEARCH, ENIGMA SECURITIES (CRYPTOCURRENCY BROKERAGE IN LONDON)
"There's still just a steady march of institutional buying underpinning everything - retail interest has ebbed and flowed since the new year, but those institutional flows have been consistent.
"We tend to think that public perception on how much is actually being acquired on the institutional side actually lags behind reality, and hence 'skin-in-the-game' announcements from the big signposts in the space have been most wont to move markets on short time frames.
"We are getting into somewhat tricky territory now - most sensible prognostications for the next cycle high made in 2019 and 2020 fell somewhere in the $50,000-$150,000 range, so the spectre of a cycle high will start to cross some minds in coming weeks."
JACOB SKAANING, CYRPTO HEDGE FUND ARK36
"The recent market conditions and events both in the crypto space and the financial world at large put such a price movement within the realm of possibility," said Jacob Skaaning of crypto hedge fund ARK36.
"However, I'd like to offer a word of caution: while my long-term outlook is bullish, massive price fluctuations along the way are only to be expected. Bitcoin is still extremely volatile."
JAMES BUTTERFILL, INVESTMENT STRATEGIST, COINSHARES (DIGITAL ASSET MANAGER)
"50k Bitcoin is a key technical level but it represents little else other than that. We are seeing continued appetite from investors as indicated by fund flows, net new assets this year are at $2.95 billion for this relative to $6.7bn for the whole of 2020.
"The fundamental view that Bitcoin as a viable store of value amongst investors and as a treasury asset for corporations is continuing to gain traction."
JOHN WU, PRESIDENT OF AVA LABS (BLOCKCHAIN COMPANY)
"What excites me about this BTC all-time high is that we are now seeing validation of this space from the broad adoption from institutional investors and corporations... We are now seeing a great mix of investors and these are great signs that we are hitting the inflection point of digital asset adoption.
"We are seeing cryptocurrency companies going public, institutions like BNY Mellon offering custodial services, to Mastercard providing crypto payment rails. Consumer demand is driving these developments and we are on our way to a point where digital assets will be used in everyday life."
ART HOGAN, CHIEF MARKET STRATEGIST, NATIONAL SECURITIES, NEW YORK
"Bitcoin’s volatile, fivefold advance over the past year towers above the returns from more traditional investments like stocks, gold and commodities.
"The ascent has been buoyed by the widening adoption of the cryptocurrency, most notably Tesla Inc.’s disclosure this month of a $1.5 billion purchase. Yet a debate continues about whether the token has any intrinsic value at all, amid warnings that investors could be left with big losses because cryptocurrencies remain highly speculative."
FLEX YANG, CEO, BABEL FINANCE (CRYPTO FINANCIAL SERVICES PROVIDER), HONG KONG
"There are three main drivers for the latest price jump and we anticipate that bitcoin’s price will skyrocket before the end of 2021.
"First, the continued trend of the institutionalisation of the crypto industry, as seen in the most recent case with Tesla buying bitcoins at the value of $1.5 billion.
"Second, the mining industry in the West has also had its shining moment... Last but not the least, we believe the regulation on crypto-assets has played a significant role as well. Major asset managers believe that the new U.S. administration is cautious, yet friendly towards Bitcoin as the U.S. Secretary of Treasury, Janet Yellen, has been calling for a better understanding of bitcoin and its positive role in America’s monetary policy."
GEORGE LAGARIAS, CHIEF ECONOMIST AT MAZARS (TAX AND ADVISORY FIRM)
"Warren Buffet said 'Price is what you pay; value is what you get'.
"We feel that, due to its volatility, bitcoin lacks many of the established qualities that make up 'money', such as being a stable store of value and unit of account.
"As an intangible asset with no yield or practical use, save for a few organisations who accept it as payment, it is really just demand (against a predictable supply) which determines its price. But whereas the price of bitcoin has risen to skies, what value one gets from holding it in a long-term portfolio still remains subject of much debate."
SIMON PETERS, ANALYST AT INVESTMENT PLATFORM ETORO
"Bitcoin’s incredible rise this year shows no sign of abating. This latest landmark shows how it now has to be considered a mainstream investment asset.
"Ultimately, bitcoin is disrupting the status quo, and capitalising on the waning power of the dollar. As retail investors look to hedge against inflation, and institutions look for avenues to help drive growth, there’s no reason why $70,000 can’t soon be the new normal."
(Reporting by Tom Wilson, Thyagaraju Adinarayan, Anna Irrera, Tommy Wilkes, Alden Bentley and Joice Alves; editing by Kirsten Donovan, Jason Neely and Nick Macfie)
