Bitcoin pierces US$57,000 level as traders resume push for record highs

Some strategists are also cheering the resilience of the Bitcoin as seen by the recovery in its so-called hash rate.
Some strategists are also cheering the resilience of the Bitcoin as seen by the recovery in its so-called hash rate.PHOTO: REUTERS

NEW YORK (BLOOMBERG) - Bitcoin has climbed above US$57,000 (S$77,300) for the first time since May as speculators bet that the largest cryptocurrency will retest the record highs reached earlier this year.

The digital currency rose as much as 4.3 per cent to US$57,829 on Monday (Oct 11) in New York before paring gains. It reached almost US$65,000 in April, and has roughly doubled this year.

The Bloomberg Galaxy Crypto Index increased as much as 2.4 per cent on Monday.

As in past rallies, a myriad of reasons are being cited for the latest surge, from an easing of concern about regulatory efforts in the United States and China to renewed optimism about a possible US Securities and Exchange Commission (SEC) approval of a Bitcoin exchange-traded fund (ETF).

Investors are particularly excited that a Bitcoin futures ETF may soon be given the green light by the US regulator, as SEC chair Gary Gensler has signalled openness to a fund focused exclusively on the derivatives-based product.

Many investors and advisers have had crypto on their to-do list and "are finally making the move with allocations that start with Bitcoin", or crypto funds like Bitwise 10 that invest heavily in Bitcoin, said Bitwise Invest chief executive Hunter Horsley.

Bitwise has seen hundreds of advisers make their first allocations to crypto over the last several weeks, with many flocking to the asset class amid macro-fears about inflation and low yields, he said.

Some strategists are also cheering the resilience of Bitcoin as seen by the recovery in its so-called hash rate, a measure of computing power being contributed to the network, following China's latest crackdown on mining earlier this year.

As mining operations in China shut down, transaction processors across North America ramped up. A metric that tracks the hash rate's power has jumped 103 per cent since late June, according to a report from Luxor Technology.

"The time-honoured FUD (fear, uncertainty and doubt) that China controls (or will attempt to control Bitcoin) is now moot. Hash rate is being distributed around the globe, with North America emerging as the new dominant hub," said the report.

Analysts who look at patterns in price charts say that US$60,000 is the next level of resistance, though Bitcoin's relative strength index above 70 suggests that it is now in overbought territory.

Separately, JPMorgan Chase chief executive Jamie Dimon said that cryptocurrencies are going to be regulated as anxiety around stablecoins and the asset class more broadly has been growing in Washington.

"Blockchain can be real, stablecoins can be real," Mr Dimon said at the Institute of International Finance annual membership meeting, held virtually again this year.

"No matter what anyone in the room thinks, nor what any libertarian thinks, nor what anyone thinks about it, the government is going to regulate it."