Bitcoin smashes past US$5,000 mark

ISTANBUL • Bitcoin surged to a fresh record yesterday as the enthusiasm for cryptocurrencies showed little sign of abating.

The world’s largest cryptocurrency rose as much as 8.4% and was trading 7.9% higher at US$5,209 (RM21,994) as of 12:34pm yesterday in London, resuming gains after a one-day break. As recently as December, bitcoin was trading at less than US$1,000 dollars.

Bitcoin tumbled below US$4,000 last month after China’s central bank banned initial coin offerings and ordered all cryptocurrency exchanges to close. Recent reports that Goldman Sachs Group Inc is exploring how it could help its clients trade cryptocurrencies are now helping sentiment.

“Everyone seemed to agree that once it broke through US$5,000, the sky is the limit. I wouldn’t be surprised to see it double from here in a very short space of time,” said Ben Kumar, a money manager at Seven Investment in London, who invests in bitcoin in an individual capacity.

“There’s a long time to run before people get tired of chasing the next big thing.”

The digital currency’s 440% surge this year has divided the financial community between those convinced it is a bubble on the verge of popping and those looking for ways to piggyback on its success.

Goldman Sachs is in talks with cryptocurrency experts but hasn’t yet formulated a business plan, a timetable for implementation or made any bitcoin-related investments, a person briefed on the plan said earlier this month.

What happens from here depends a lot on how governments decide to regulate the virtual currency, Kenneth Rogoff, professor of economics and public policy at Harvard University, wrote in a column published in Project Syndicate this week.

Global efforts to regulate digital money have accelerated in the past month since China’s ban. At least 13 other countries have imposed new rules or announced plans to tighten regulations.

Russian President Vladimir Putin this week called for regulation of cryptocurrencies, but stopped short of backing a broad ban.

“It’s a very speculative market,” Jon Moulton, a UK-based private equity veteran who owns bitcoins, said in an interview with Bloomberg TV’s Francine Lacqua.

“It’s going to be a very volatile asset for a long time.” — Bloomberg