Cryptocurrencies hit the milestone after a fivefold climb in
market value in the past year, data from tracker CoinGecko shows. Strategists
have cited demand from speculative retail traders, trend-following quant funds,
the rich and even institutional investors as among the reasons for the surge.
Bitcoin rose as much as 4 per cent on Thursday to top
$37,000 and has more than quadrupled in the past year, according to a composite
of prices compiled by Bloomberg. It accounts for about two-thirds of
cryptocurrency market value, followed by Ether on about 14 per cent. Ether is
up 62 per cent so far this year.
Digital coins are jumping in a world awash with fiscal and
monetary stimulus, even as some commentators fear an inevitable bust and others
question the basic integrity of crypto markets. Proponents of Bitcoin argue it
offers a hedge against dollar weakness and the risk of faster inflation, a bit
like gold, while critics decry the intellectual soundness of comparing the two
assets.
Active Bitcoin accounts are nearing their all-time high
levels of late 2017, according to researcher Flipside Crypto -- possibly a sign
that some holders are planning to sell. Fewer than 2 per cent of accounts hold
95 per cent of Bitcoin supply, so a few big trades can impact prices. The last
big Bitcoin boom began imploding in late 2017.
Some traders pointed to JPMorgan Chase & Co.’s long-term
Bitcoin price forecast of $146,000 as possibly fueling the rally. Others said
sentiment was boosted by a US regulatory update that allows a class of less
volatile coins to be used by banks for payments.
© 2021 Bloomberg LP
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