Bitcoin pulls back from brink of US$50,000 after wider adoption fuels record rally

Bitcoin and other virtual currencies appear to be increasingly entering the mainstream.
Bitcoin and other virtual currencies appear to be increasingly entering the mainstream.PHOTO: REUTERS

SINGAPORE (REUTERS) - Bitcoin pulled back from a record high on Monday (Feb 15) and other cryptocurrencies slipped, as investors took profits from a record-breaking rally that had pushed bitcoin close to US$50,000 (S$66,276).

Bitcoin fell as much as 5.6 per cent to US$45,914 in Asian trading hours after having posting a record peak of US$49,714.66 on Sunday, while rival crypto ethereum slid more than 8 per cent.

Once on the fringes of finance, bitcoin is fast gaining legitimacy as an asset class and has leapt 20 per cent in the week since electric carmaker Tesla announced it had US$1.5 billion in bitcoin and would accept the currency as payment.

It is up more than 60 per cent for the year to date and has gained more than 1,100 per cent since hitting a one-year low last March.

“There’s this unadulterated wave of big players (buying) that has continued to push the price higher,” said Chris Weston, head of research at Melbourne brokerage Pepperstone. “We might be seeing one or two big funds just cashing out,” he said.

“The big question is: OK, you want to buy the pullback, but how big is the pullback that we are talking about?”

Besides Tesla’s investment, Bank of NY Mellon last week said it formed a new unit to help clients own and trade digital assets.

Bloomberg reported on Saturday that Morgan Stanley’s investment arm is weighing a bet on bitcoin. 

Last Friday, Canada’s Ontario Securities Commission approved the launch of Purpose Bitcoin ETF, Toronto-based asset management company Purpose Investments said in a statement. The OSC confirmed it had cleared the launch of the world’s first bitcoin exchange-traded fund, in a separate statement to Reuters.

“The institutional side and corporate America is showing that this movement is not going away anytime soon,” said Edward Moya, senior market strategist at OANDA. “There’s still a raft of big money that’s going to jump onto this bandwagon.”

Mayor Francis Suarez of Miami also said on Friday the Florida city is seeking to embrace bitcoin in its operations, a move that could bring dividends in terms of attracting technology companies.

In January, BlackRock, the world’s largest asset manager, added bitcoin as an eligible investment to two funds.

Credit card giant Mastercard’s plans to offer support for some cryptocurrencies also boosted bitcoin’s ambitions towards mainstream finance, though many banks remain reluctant to engage with it.