Bitcoin hits record high day before Coinbase IPO

Bitcoin hit a record of US$63,769, extending its 2021 rally to new heights a day before the listing of Coinbase shares in the United States.

The largest U.S. cryptocurrency exchange’s listing on the Nasdaq on Wednesday is considered a landmark victory for cryptocurrency advocates.

Bitcoin is the world’s biggest cryptocurrency, with growing mainstream acceptance as an investment and a means of payment. It rose as much as 5 per cent on Tuesday. Smaller rival Ethereum also reached a record high of US$2,205.

The overall cryptocurrency market capitalization hit an all-time peak of US$2-trillion earlier this month, according to data and market trackers CoinGecko and Blockfolio.

Major firms including BNY Mellon, Mastercard Inc. and Tesla Inc. are among those to have embraced or invested in cryptocurrencies.

Bitcoin topped US$60,000 early last month, fuelled by Tesla’s move to buy US$1.5-billion of the digital currency for its balance sheet. For the past two weeks, it had traded in a tight range.

“When bitcoin markets create new highs, the price often range-trades and we witness a round of profit-taking,” said James Butterfill of digital asset manager CoinShares.

“During this most recent period, [we] have witnessed a similar profit-taking round, which now looks to have run its course.”

Simon Peters, analyst at multi-asset investment platform eToro, said “demand is flooding the market from institutions just as large amounts of bitcoin and ethereum are increasingly being taken offline and holders are transferring them to their own wallets.”

“There is only one outcome from that, and investors should expect higher highs and higher lows throughout the year,” he added.

The multifold rise in cryptocurrencies is also driven by investors seeking high-yielding assets amid low interest rates. However, the meteoric rise of bitcoin, which traded at a few hundred U.S. dollars only five years earlier, has led major investment banks to warn of a speculative bubble.

Several fund managers surveyed by BofA and Deutsche Bank have said Bitcoin was in “bubble” territory and expect it to pull back sharply.

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