Bitcoin rises after rapid climb to new record

Published On : 03/08/2024

By Amanda Cooper and Rae Wee

LONDON/SINGAPORE (Reuters) -Bitcoin rallied again on Wednesday in volatile trade, while ether jumped almost 10% as crypto mania continued to sweep through the investment community.

Bitcoin rose by as much as 6.8% to a session high of $67,645, after having dropped 6% on Tuesday from an earlier record high above $69,000. It was last up 5.7% at $66,896.

Ether, meanwhile, surged by 9.8% to its highest since January 2022. It was last up 8.6% at $3,827.

Bitcoin has already surged 55% this year so far, fuelled by investors pouring money into U.S. spot exchange-traded crypto products and the prospect that global interest rates may fall.

Billions of dollars have flowed into ETFs in the past few weeks and the market is getting extra support from an outlook that includes an ethereum upgrade and bitcoin “halving,” which slows the flow of bitcoin minting, said Lennix Lai, global chief commercial officer at crypto exchange OKX.

“The trend also indicates an elevated level of mainstream acceptance of bitcoin, perhaps more than ever before.”

The approval of 11 spot bitcoin ETFs by the U.S. Securities and Exchange Commission in late January had marked a watershed moment for the industry, following an 18-month long crypto winter plagued by a string of high-profile corporate bankruptcies and scandals.

Even institutional investors who once shunned crypto due to its sharp and wild moves, have begun committing long-term money too, which experts say could help sustain the latest leg of this rally.

The recent optimism over bitcoin has also spilled over to other digital tokens, particularly ether, which ranks second behind bitcoin in terms of total market value, up more than 60% since the start of the year.

Still, some say it’s hard to shake off the speculative nature of these assets. After hitting the record high on Tuesday, bitcoin sharply reversed course and fell more than 10% back below the $60,000 level.

“That looks like classic bitcoin behaviour – it chews you up then spits you back out,” said Matt Simpson, senior market analyst at City Index.

“A pump and dump to previous record highs wiped out some weaker hands, and I suspect we’re now in the volatile and erratic phase we usually see when it reaches a record high.”

Deutsche Bank strategist Jim Reid noted that bitcoin is some way off an all-time high in real, or inflation adjusted, terms.

“Consumer prices are up by over 10% since the previous November 2021 peak, so in real terms, that would be above $75,000 in today’s prices,” he said.

(Reporting by Tom Westbrook and Ankur BanerjeeEditing by Shri Navaratnam and Louise Heavens)

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