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REUTERS / Dado Ruvic / Illustration
- Bitcoin jumped 7.5% on Thursday to $ 40,094.81.
- The scorching cryptocurrency has seen immense volatility in recent days, with thousands of dollars per coin added and phased out over short periods of time.
- Thursday’s surge comes after European Central Bank Director Christine Lagarde called for more regulation the day before.
- Morgan Stanley analysts say bitcoin focus is ‘not surprising’ given low bond yields
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Bitcoin rose sharply again on Wednesday evening and Thursday morning, surpassing the $ 40,000 mark.
The past few weeks have been volatile for bitcoin, with its price hitting an all-time high of nearly $ 42,000 last week before parrying. The price has consistently hovered around 10% per day with investors buying and cashing in the cryptocurrency, which has jumped over 330% in a year.
Bitcoin climbed 7.5% to $ 40,094.81. Small rival Ethereum rose 7.2% in 24 hours to $ 1,160.
The dramatic rise in the price of bitcoin and other cryptocurrencies has sharply divided market opinion, pitting a large part – but not all – of the financial institution against a new breed of online investors.
European Central Bank boss Lagarde said on Wednesday that Bitcoin needed to be regulated globally and linked it to “grossly reprehensible money laundering”.
Read more: CIO of $ 500 Million Crypto Asset Manager Breaks Down 5 Ways to Valuate Bitcoin and Decide to Own It After Digital Asset First Crossed $ 40,000
She said bitcoin is not a currency, as many of its supporters argue, but a “highly speculative asset that has conducted some fun business.”
Bambos Tsiattalou, a financial crime lawyer at Stokoe Partnership Solicitors in London, said stricter regulation would be a major problem for cryptocurrencies.
“A lot of people buy Bitcoin and other cryptocurrencies because they are worried and don’t trust fiat currencies,” stricter regulations would demolish much of their appeal, he said.
Read more: Cathie Wood’s ARK Invest manages 5 active ETFs that more than doubled in 2020. She and her analysts share their 2021 outlook on the economy, bitcoin and Tesla.
Yet despite the raised eyebrows of regulators and central banks, soaring prices prompted some institutional investors to join.
Morgan Stanley analysts said in a note: “With the dollar falling sharply, deeply negative real yields and continuing political uncertainty, investors have sought alternatives to traditional liquidity.”
They added: “Innovation in digital assets continues rapidly and will likely lead to an increase
institutional participation over time. “
Still, analysts have warned that “perceptions of ‘value’ and demand can vary widely, for example due to changing regulations.”
Read more: ‘Very technically disconnected’: Market strategist breaks down 3 indicators that show Tesla is overvalued – and says it is expected to undergo a 17% correction in the next 6 weeks
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