Bitcoin notched a fresh record on Thursday and solidified its recent run-up in price after tumbling on the back of a series of critical comments, including those from J.P. Morgan Chase CEO Jamie Dimon, who referred to the asset as a “fraud.”
A single bitcoin
on Thursday afternoon was worth $5,220.54, eclipsing an intrasession high reached in early September around $5,000. The cybercurrency has risen by about 75% since hitting a low of $2,985.24 in mid-September, research-and-data site CoinDesk shows.
Although it isn’t entirely clear why the digital currency is resurgent, here are a few reasons market participants attribute to its record-setting advance:
1. Bets on digital-currency dividend
Some investors are wagering that a pair of so-called hard forks in core bitcoin, which will create two separate versions of the No. 1 cryptocurrency, will boost the holding of digital-currency assets.
- On Oct. 25, so-called Bitcoin Gold designed to address challenges mining for bitcoin using computers to solve complex problems, will be launched.
- On Nov. 18, bitcoin will face a second version of Segregation Witness, or SegWit2x, which would create an alternative version of the bitcoin.
2. China bitcoin exchanges
Charles Hayter, chief executive officer and founder of CryptoCompare, said heightened speculation that China may license digital-currency exchanges and allow them to reopen after a recent ban. Beijing last month moved toward a broad clampdown on bitcoin trading.
3. Amazon.com speculation
There are rumors about Amazon.com Inc.
accepting bitcoin on its retail platform. According to a blog post on Seeking Alpha, Amazon could announce that it will accept bitcoin as payment on its site when it reports quarterly results Oct. 26, which could lead others, including Alibaba Group Holding Ltd.
to follow suit.
Fear of missing out, or FOMO, also may be propelling bitcoin and other cyber currencies higher. A cycle of news covering the virtual currency’s path to new heights can draw fresh attention to it and encourage further buying, thereby propelling the asset ever higher.
Of course, there are plenty of worries that the asset has all the telltale signs of a speculative bubble.
5. Wall Street attention
As the virtual currency gains more attention from average folks, it is also garnering eyeballs and investments from hotshot Wall Street veterans. A co-founder of alternative asset manager, Fortress Investment Trust, Michael Novogratz is starting a $500 million fund to invest in cryptocurrencies and told CNBC during a recent interview that the cryptographic currency could be worth $10,000 in six to 10 months.
Meanwhile, Goldman Sachs Group
is reportedly exploring a new trading platform that would be centered on trading in bitcoin and its rivals, like Ether.