What Bitcoin price rise means amid a Paypal nudge

What Bitcoin price rise means amid a Paypal nudge
Courtesy: Reuters

Bitcoin's price surged past $50,000 on Monday for the first time since May, although its rebound from a months-long slump lost a little steam.

The world's largest cryptocurrency was last up 1.19 per cent at $49,888. It had risen as high as $50,562 as investors bet that the prospect of more U.S. stimulus spending would lead to further gains, and more mainstream financial services firms made moves in the nascent asset class.

Bitcoin has risen 82 per cent since hitting a yearly low of $27,700 in January.

Meanwhile, the price of rival cryptocurrency ether rose 2.71 per cent to $3,329. The virtual coin has risen 91 per cent since slumping to below $1,740 last month.

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The cryptocurrency recovery comes as some more established financial services companies offer their customers access to virtual coins. PayPal Holdings Inc said on August 23 it would allow customers in Britain to buy, sell and hold bitcoin and other cryptocurrencies starting this week.

Edward Moya, senior market analyst at OANDA in New York, said the late-morning price dip below $50,000 seemed to be profit taking. He pointed out that fears of capital gains taxation has led some traders to hold cryptocurrency as a long-term investment, removing some volatility from the market.

"New investors are the key to this latest bitcoin rally and all signs show they are comfortable with high risk," he said in an email, adding that bitcoin "could see a fast appreciation here and might not hesitate making a run for $60,000 if appetite for risky assets remain intact."

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Others also believe the upswing could have further to go if more retail investors return to the market.

"The last time bitcoin was at $50,000, the Google trends (tracking website showing bitcoin searches) was much higher than what it is now," Marcus Sotiriou, a sales trader at the UK based digital asset broker GlobalBlock, said in a note.

"This suggests that retail euphoria hasn't entered the market yet and bitcoin has a long way to go in this market cycle."

(Reuters)

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