KEY POINTS
- Bitcoin hit a fresh record high of $51,715 on Wednesday, according to data from Coin Metrics.
- Major investment banks appear to be warming to bitcoin, while Tesla and other firms have also shown support for the cryptocurrency.
- JPMorgan warned that unless bitcoin’s volatility starts to ebb, its current price “looks unsustainable.”
Bitcoin surged above the $51,000 level on Wednesday for the first time.
The red-hot cryptocurrency hit a fresh record price of $51,715 at around 4:50 a.m. ET, according to data from Coin Metrics. It was later trading 5% higher at $51,024.
Bitcoin was created in 2009, not long after the global financial crisis. It has gone from a protest against the banking system to something of a “digital gold” that is beginning to catch on with mainstream investors.
On Wall Street, major investment banks appear to be warming to bitcoin. JPMorgan said recently it’s looking seriously at the asset class, and Goldman Sachs has also shown an interest in crypto. A division of Morgan Stanley is reportedly considering adding bitcoin to its list of possible bets.
Companies like PayPal and Mastercard have made significant moves to support cryptocurrencies. And Tesla last week said it had invested $1.5 billion into bitcoin and planned to accept the digital currency as payment for its products.
“We believe the story and theme here is much larger than just investing in Bitcoin and predicting its future price, but rather around the potential ramifications that crypto, blockchain, and bitcoin could have across the technology and corporate world for the next decade,” Dan Ives, Wedbush Securities’ managing director, said in a note Wednesday.
“From Paypal, and Square, to the likes of Nvidia, Tesla, IBM, Visa, Mastercard and many other companies across verticals, we believe the trend of transactions, bitcoin investments, and blockchain driven initiatives could surge over the coming years as this bitcoin mania is not a fad in our opinion, but rather the start of a new age on the digital currency front.”
Bitcoin’s latest rally has reminded many investors of its massive ascent to nearly $20,000 in 2017, which was followed by a plunge the following year that saw the digital coin lose 80% of its value.
But the world’s most valuable cryptocurrency has since staged a fierce comeback, more than quadrupling in 2020 and gaining over 70% this year.
Bitcoin’s proponents say it’s due to increased demand from institutional investors as well as corporate buying of the digital currency from the likes of Tesla, Square and MicroStrategy. Skeptics, on the other hand, worry bitcoin may be the biggest market bubble in financial markets.
Strategists at JPMorgan warned in a note Tuesday that unless bitcoin’s volatility starts to ebb, its current price “looks unsustainable.” Bitcoin and other cryptocurrencies have gained a reputation for their extreme price swings.
Source: CNBC