Bitcoin surges to highest level in 1½ years

SYDNEY •Bitcoin jumped yesterday, almost breaching US$9,000 (S$12,400), as it extended what is shaping up to be the best one-month rally since before the token's historic surge in 2017.

The largest cryptocurrency climbed as much as 10 per cent yesterday from levels late last Friday and was trading at US$8,766 as of 10.40am in London (5.40pm Singapore time).

Rival coins were also stronger at the start of the week.

Litecoin added more than 11 per cent while Ether, the second-largest digital token, rose 5.7 per cent.

Crypto proponents are taking encouragement from a string of recent headlines showing greater interest in the space from mainstream firms.

AT&T said last week that it will permit customers to pay bills with bitcoin or bitcoin cash. That followed news that Fidelity Investments was finalising plans to buy and sell the digital asset for institutional customers.

Bitcoin is up almost 70 per cent this month, despite concerns from JPMorgan Chase strategists that its price may have surged beyond its "intrinsic value" - a concept that not all investors agree applies to a digital currency.

"Easier to spend means a greater-use case and a greater level of adoption," Mr Mati Greenspan, senior market analyst at eToro, wrote in a note last Friday. "The tipping point is likely very close now."

Bitcoin's run this year follows a painful downtrend that lasted the majority of last year and saw the digital currency tumble more than 70 per cent.

Bulls are betting the run could continue as more institutions start to build up their own cryptocurrencies or launch projects using the underlying blockchain technology.

"It takes two to tango. The more merchants accept crypto, that encourages more people to adopt it and use it," said Mr David Tawil, president of crypto hedge fund ProChain Capital. "That's major."

But the crypto meltdown is still fresh on many investors' minds and not everyone is betting that digital assets will become as widely accepted as enthusiasts hope.

There are signs the rally is running too hot, wrote Bloomberg Intelligence analyst Mike McGlone in a note.

Crypto transactions, for instance, have been lagging behind the broader rally, indicating caution for additional price increases, he said.

"This is still the thawing-out from the crypto winter that was," said Mr Tawil.

"There still may be another pullback before we get to fundamentals truly taking over, and speculators and frauds being expunged."

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A version of this article appeared in the print edition of The Straits Times on May 28, 2019, with the headline 'Bitcoin surges to highest level in 1½ years'. Print Edition | Subscribe