3 min read.Updated: 02 Mar 2021, 07:31 AM ISTBloomberg
Bitcoin and other cryptocurrencies are drawing increasing attention from mainstream financial institutions alongside a growing focus from goverment regulators as well
Citigroup’s full-throated backing of Bitcoin shows that crypto is continuing to win over the world’s biggest financial institutions
Bitcoin touched the $50,000 level in Asia trading, riding a broad resurgence in risk assets, with Citigroup Inc. and Goldman Sachs Group Inc. warming up to the largest cryptocurrency.
The digital asset climbed as much as 2.8% Tuesday, and was holding at $49,080 as of 9:05 a.m. in Hong Kong. Prices last week suffered the worst decline since March and dipped as low as $43,000 on Sunday. Bitcoin climbed to a record $58,350 on Feb. 21.
Bitcoin and other cryptocurrencies are drawing increasing attention from mainstream financial institutions and Wall Street players, alongside a growing focus from goverment regulators as well, as the nascent industry’s outlook continues to be subject to furious debate. Proponents point to growing institutional adoption while detractors warn prices are in a speculative bubble.
Cboe Global Markets Inc. disclosed it is seeking approval to list and trade shares of what could be the first Bitcoin exchange-traded fund in the U.S., according to a Monday regulatory filing. Meanwhile New York Attorney General Letitia James issued an investor alert on the industry, warning consumers about its susceptibility to “speculative bubbles" and abuse by criminals.
In a report by Citigroup’s Global Perspectives & Solutions, strategists laid out a case for Bitcoin to play a bigger role in the global financial system, saying the cryptocurrency could become “the currency of choice for international trade" in the years ahead. Bitcoin has advantages over the current global payment system, such as its decentralized design, lack of foreign exchange exposure and traceability, the strategists said.
Goldman is restarting a trading desk for cryptocurrencies, a person familiar with the effort said. The Wall Street bank will begin offering Bitcoin futures among other products by mid-March after halting a similar effort started in 2018, according to the person, who asked to to be named because the plans haven’t been announced.
“The more banks that come out with constructive comments on Bitcoin, the more likely the speculative bubble will continue to grow," said Ed Moya, senior market analyst for OANDA.
Citigroup’s full-throated backing of Bitcoin shows that crypto is continuing to win over the world’s biggest financial institutions. Dan Loeb, head of Third Point LLC, said in a Twitter post that he’s been “doing a deep dive into crypto lately," adding that “it is a real test of being intellectually open to new and controversial ideas."
While banks continue to dip their toes deeper into the world of digital assets, a small group of corporations are busy snapping up coins to add to their balance sheets. MicroStrategy Inc., announced Monday that it purchased an additional 328 Bitcoins, increasing its pile to about 90,859. The company’s holdings are now worth over $4 billion.
Bitcoin plunged 21% last week as investors dumped speculative assets amid a run-up in bond yields. The volatility has raised questions about whether it can act as a store of value and hedge against inflation. Detractors have maintained the digital asset’s surge is a speculative bubble and it’s destined for a repeat of the 2017 boom and bust.
“Bitcoin’s wild ride is far from over, but it seems another attempt at $50,000 could be in the cards if the bond rout is truly over," Moya said. “Bitcoin can survive a steady rise in Treasury, but not a skyrocketing move like we saw last week."
Elsewhere, China’s Inner Mongolia banned cryptocurrency mining and declared it will shut all such projects by April, spurring concern the communist nation will take more steps to eradicate the power-hungry practice.
The autonomous region, a favorite among the industry because of its cheap power, also banned new digital coin projects, according to a draft plan posted on the Inner Mongolia Development and Reform Commission’s website Feb. 25. The aim is to constrain growth in energy consumption to about 1.9% in 2021.
The sheer amount of energy needed to mine Bitcoin and the prospect that governments will create more obstacles for the largest cryptocurrency point to the token losing “most of its value over time," BCA Research Chief Global Strategist Peter Berezin wrote in the report released Friday.
This story has been published from a wire agency feed without modifications to the text.