Bitcoin staged a rally over the weekend to hit a one-month high despite experts warning of a potentially volatile upcoming event for the cryptocurrency.
The digital currency traded at $4,626.26 on Monday morning at 4 a.m. London time, its highest level since September 8, according to data from industry website CoinDesk. It was up over 5 percent from the start of trade on Saturday.
Bitcoin has had a rocky few weeks. It hit an all-time high on September 2 of $5,013.91, before declining sharply to below $3,000 in the next two weeks.
Investors were concerned about the sharp price rise of bitcoin but also some of the regulatory clampdowns by China. The world’s second-largest economy banned initial coin offerings (ICOs), which is a new way for cryptocurrency start-ups to raise funds by issuing digital tokens. The largest bitcoin exchanges in China have also shut down their operations there.
And at the same time, major business leaders have poured cold water over bitcoin. JPMorgan Chase CEO Jamie Dimon said bitcoin “is a fraud” last month.
But some of the negative sentiment has been offset by other positive developments in the industry.
Japan appears to be filling the void left by China with supportive regulation. Earlier this year, Japan legalized bitcoin, with major retailers beginning to accept it as a form of payment. And last month, the country’s financial services watchdog recognized 11 companies as registered cryptocurrency exchange operators.
Institutional investors are also beginning to look at bitcoin more seriously. Goldman Sachs is considering the launch of a new trading operation focused on bitcoin and other digital currencies, a company official told CNBC last week.
“Bitcoin’s rally is continuing off the back of a more certain regulatory environment across the world, most notably in Japan. This has encouraged more institutional funds to enter the market and we are finally seeing the effect of this additional liquidity,” Aurélien Menant, founder and CEO of Gatecoin, told CNBC by email on Monday.
Menant told CNBC last week that bitcoin could get close to $6,000 by the end of the year, but short-term volatility could be ahead. That’s because earlier this year, bitcoin underwent a split or “fork” which created another cryptocurrency called bitcoin cash.
That split happened due to technical changes in the underlying technology behind bitcoin, known as the blockchain. But that change, which is currently being implemented, could be rejected by a large section of the bitcoin community, which could actually lead to another fork.
“The forthcoming bitcoin fork in November will result in greater volatility and risk for this new asset class,” Menant said.
Source: CNBC
