‘Sky’s the limit’ after bitcoin hits all-time high.

‘Sky’s the limit’ after bitcoin hits all-time high.

Bitcoin bubble or just the beginning? Or both? Those are the questions being asked around the world after the digital currency breached $US5000 ($6385) for the first time, pushing this year’s gains to more than fivefold.

As recently as December, bitcoin — a worldwide cryptocurrency and digital payment system — was trading at less than $US1000. Since then, it has dodged everything from tightening regulations, feuding factions splitting its underlying blockchain and warnings from financial bigwigs.

The latest surge is being driven in part by increasing institutional interest, with some previous sceptics saying they are now open to ways to get involved.

Interest is growing by the day, as measured by internet searches. SEMrush, a data analytics firm, found the price had a 96 per cent correlation with Google searches on bitcoin, suggesting that growing interest in the cryptocurrency is helping to drive demand.

Bitcoin tumbled below $US4000 last month after China’s central bank banned initial coin offerings and ordered all cryptocurrency exchanges to close. Reports that the Chinese government will ease those regulations is also helping the price.

A rotation out of digital tokens sold in initial coin offerings (ICO) and into bitcoin is providing an additional boost.

Investors are becoming increasingly wary as projects with little substance have mushroomed, and as hacks and technical issues have caused some to lose thousands.

“Everyone seemed to agree that once it broke through $US5000, the sky is the limit,” said Ben Kumar, a money manager at Seven Investment in London.

“I wouldn’t be surprised to see it double from here in a very short space of time. There’s a long time to run before people get tired of chasing the next big thing.”

Bitcoin’s rally and the proliferation of other digital assets is attracting the wary eyes of regulators globally. China and South Korea banned ICOs, while Russian President Vladimir Putin this week called for regulation of the sector.

At least 13 other countries have imposed new rules or announced plans to tighten regulations.

The digital currency’s surge has divided the financial community between those convinced it is a bubble on the verge of popping while other big-name investors like Mark Cuban and Mike Novogratz said they are investing in the sector.

Vanuatu will now let outsiders use the cryptocurrency to apply for so-called investment citizenship.Vanuatu will now let outsiders use the cryptocurrency to apply for so-called investment citizenship.

 

Novogratz, who is starting a $US500 million cryptocurrency fund, said this week he believes the price will double to $US10,000 in less than a year.

The road is sure to be rocky, as bitcoin’s volatility is still 10 times that of gold.

And if you do have some bitcoin burning a hole in your digital wallet, you could use it to buy a second passport.

Vanuatu will now let outsiders use the cryptocurrency to apply for so-called investment citizenship.

Fork over the equivalent of about $US280,000, and your family of up to four can receive passports from what the New Economics Foundation, a UK-based think tank, calls the fourth-happiest country in the world.

Vanuatu isn’t the only island that offers citizenship for a price. The list includes Antigua, Grenada, Malta, and St Kitts and Nevis but it’s the first to allow payments via bitcoin.

Thewest

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