Bitcoin tops US$50,000 as Bank of America says crypto 'too large to ignore'

Bitcoin rose as much as 2.8 per cent in early New York trading on Oct 6 to touch US$50,354.
Bitcoin rose as much as 2.8 per cent in early New York trading on Oct 6 to touch US$50,354.PHOTO: REUTERS

LONDON (BLOOMBERG) - Bitcoin has rallied above US$50,000 as Bank of America (BOA) strategists threw their weight behind cryptocurrency as a new asset class.

The rally brings prices to the highest since early September, when El Salvador rolled out the cryptocurrency as legal tender. Bitcoin rose as much as 2.8 per cent in early New York trading on Wednesday (Oct 6) to touch US$50,354.

The universe of digital assets is "too large to ignore", wrote the BOA strategists. "Our view is that there could be more opportunity than sceptics expect."

The BOA report shows that enthusiasm for crypto is gaining traction on Wall Street despite its many controversies. Just last month, China issued a blanket ban on transactions and United States financial watchdogs are investigating some of the biggest crypto exchanges.

In the eyes of the BOA, more regulation could be a positive for crypto in the long run. Once rules are established, the uncertainty over how to invest in crypto will be lifted, the strategists wrote.

Bitcoin has been slowly making its way back to its previous highs after a meltdown in May that was triggered by China's clampdown on crypto mining. Prices have been up more than 60 per cent since a low in July.

With its latest rally, Bitcoin has broken through two key resistance levels and is now trading at the higher end of its two-month-long consolidation range, according to a report from Arcane Research. 

The coin hovered around US$45,000 for a while before finally breaking out. That means the US$46,000 to US$48,000 range is a strong support level and the coin could trade in that area for some time, the report said.

"The Bitcoin price has moved around quite a lot even recently and so when we see dips in prices, we often see that as an opportunity and investors moving in to buy those dips," Grayscale Investments chief executive Michael Sonnenshein said in an interview as part of the Bloomberg Invest Global conference.

"If they fundamentally have not changed their perception or their conviction in an investment, but they can buy an asset at 10 per cent, 15 per cent, sometimes 20 per cent cheaper than they could a day or two days ago, well, that's a compelling opportunity."