Bitcoin jumps to US$50,000 as record-breaking rally accelerates

Bitcoin has risen around 72 per cent so far in 2021. PHOTO: AFP

LONDON (BLOOMBERG) - Bitcoin blew through another milestone, surging past US$50,000 (S$60,000) for the first time as the blistering rally in the largest cryptocurrency continues to captivate investors worldwide.

The world's largest cryptocurrency jumped as much as 4.9 per cent to US$50,548 and is now up about 70 per cent so far this year. Bitcoin pared its gain after setting the record high.

Ether, a rival crypto, hit a record on Friday and is up about 140 per cent year-to-date.

After ending last year with a fourth-quarter surge of 170 per cent to around US$29,000, Bitcoin token jumped to US$40,000 seven days later.

It took just nearly six weeks to breach the latest threshold, buoyed by endorsements from the likes of Paul Tudor Jones, Stan Druckenmiller and Elon Musk. Bitcoin traded for a few cents for several years after its debut more than a decade ago.

Tesla's announcement that it added US$1.5 billion in Bitcoin to its balance sheet was the most visible recent catalyst, sending the price up 16 per cent on Feb 8, the biggest one-day gain since the Covid-19 inspired financial markets volatility in March.

Optimism grew after Mastercard and Bank of New York Mellon moved to make it easier for customers to use cryptocurrencies, while Bloomberg reported Saturday that Morgan Stanley may add Bitcoin to its list of possible bets.

"Whether it's Musk, Mastercard or Morgan Stanley, the mood, music and momentum is impossible to ignore," said Antoni Trenchev, managing partner and co-founder of Nexo in London, one of the biggest crypto lenders.

"To the annoyance of many, the Bitcoin express has left the station."

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MicroStrategy doubled down on its big bet on Bitcoin. The enterprise software maker said Tuesday that it would sell US$600 million of convertible bond, with the intention of adding to its Bitcoin stash. This is the second time in three months that the Tysons Corner, Virginia-based company issued debt to fund the purchase of Bitcoin.

The 400 per cent rally over the past year comes amid a backdrop of near zero borrowing rates from central banks and unprecedented stimulus from governments in the wake of the coronavirus pandemic. Bitcoin advocates have criticised the moves as money printing even though inflation remains subdued.

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Mastercard, in a blog post last week, singled out so-called "stablecoins," which often peg their value to that of another asset, such as the US dollar. Mastercard has already partnered with crypto card providers such as Wirex and BitPay, but has required digital currencies to be converted into fiat before processing payments for transactions on its network.

Trenchev cautioned that investors should be prepared for a wild ride after the latest milestone, pointing to last month's 30 per cent pullback as evidence.

"Short-term volatility is very much a feature of this bull market and investors should prepare accordingly," he said.

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