MercoPress. South Atlantic News Agency

New world record for cryptocurrencies as Bitcoin soars past US $ 65,000

Bitcoin is on its way up but it remains a volatile asset

Bitcoin, the world's most famous cryptocurrency, Wednesday set a new record as it breezed past the US $ 65,000 threshold at 9:43 a.m. Eastern time to ultimately reach the US $ 66,900 about an hour later, it was reported.

The new increase represented a rise of more than 2% in one day, as investors welcomed the launch of the first exchange-traded virtual currency futures fund in the United States.

“Bitcoin would be a great hedge. Cryptocurrencies would be a great hedge,” billionaire investor Paul Tudor Jones was quoted as saying.

“I think that would also be a very good inflation hedge. It would be my favorite over gold right now!,” he added.

Following the debut of the first Bitcoin-traded fund, the market consensus is that as soon as it surpasses its immediate resistance, it may soon reach US $ 100,000 thanks to the current psychological momentum.

Despite the new crypto fever, several Bitcoin investors want spot prices to be tracked rather than futures, while novice traders are still struggling with terms such as “contango,” where the futures price of a commodity is higher than its spot price, and “backwardation,” which is essentially the opposite.

“More products are great, but I just don't see the point of investing in futures-based bitcoins when you can buy the asset on the spot market,” said Jodie Gunzberg, CEO of CoinDesk Indexes. “It is not like oil or cattle that is impossible for most investors to hold physically,” she added.

Cryptocurrencies have been long pushing for greater acceptance on Wall Street. Bitcoin is a cryptocurrency and a payment system with no central bank or sole administrator. In principle, Bitcoin users can transfer money to each other over a peer-to-peer network using free and open source software, something which has revolutionized the concept of money as many are still skeptical about its potential just as others were skeptical of paper money back in the 19th Century, although the outcome doesn't necessarily have to be the same.

Wednesday's developemnts showed Bitcoin bounced back from as low as US $ 29,800 in July after federal regulators allowed the first exchange-traded fund containing futures based on the cryptocurrency to start trading Tuesday.

More bitcoin futures ETFs from asset managers like ARK Invest and VanEck are expected to start trading in the coming weeks.

“People want the convenience of owning bitcoin in their brokerage accounts, and there’s probably been a lot of capital sitting on the sidelines waiting for that product to exist and now it does,” said Garrick Hileman, research chief at blockchain.com. Still, the current rally could go down in flames — just like in April. Hileman told The Washington Post that much of crypto’s recent hot streak had been driven by short-term speculators using leveraged borrowing. Interest rates on crypto loans have doubled over the past week — a tell-tale sign of rampant speculation.

“We saw those levels in the spring around bitcoin’s previous all-time high — and that proved unsustainable,” said Hileman. Even with its volatility, Hileman says bitcoin makes for a good investment in the medium- to long-term as it gains steam among institutional investors.

Since 2013, bitcoin has grown over 62,000 %.

Meanwhile, Ethereum, the second most-popular cryptocurrency after bitcoin, also saw a hefty boost on Tuesday, passing the $4,000 mark for the first time since May.