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Bitcoin soars past US$13,000 as Facebook's Libra fuels demand
[NEW YORK] Bitcoin jumped to an 18-month high on Wednesday, as investors looked for safety in alternative investments amid geopolitical tension, and cheered prospects that Facebook Inc's Libra token could push cryptocurrencies into the mainstream.
The world's biggest cryptocurrency has surged in value since April and on Wednesday hit a peak of US$13,666.02 on the Bitstamp exchange, the highest level since January 2018. So far this year, bitcoin has risen more than 260 per cent, although it remains below its all-time high of nearly US$20,000 hit in December 2017.
Bitcoin last traded up 14.7 per cent at US$13,475.
Investors have flocked back in to digital currencies after a bruising 2018. Bitcoin has risen for eight consecutive days. And now Facebook has said it would offer its own cryptocurrency, the Libra coin, by end of June 2020.
Analysts say Facebook's announcement this month has revived interest in digital currencies, while investors seeking safety have also pushed up bitcoin's price.
"Cryptocurrency traders were reinvigorated by Facebook's launch of their own digital coin and momentum appears to be stirring up fresh new investors," said Edward Moya, senior market analyst, at online FX broker Oanda in New York.
"Bitcoin skeptics are cautious in trying to stop this surge and may look for the next key resistance level which is US$15,000," he added.
With major central banks keeping interest rates near all-time lows, investors have been looking for ways to diversify their portfolios, including through cryptocurrenies, analysts said.
Bitcoin CME futures volumes have also increased in the past few days, as investors look for ways to get their hands on the coin via the derivatives market.
Traders, who have access to both spot and futures markets have been buying the spot and selling the futures, arbitraging the two prices, said Michael Moro, chief executive officer at Genesis Global Trading, which provides over-the-counter digital currency trading for institutional investors.
The cryptocurrency has rocketed 150 per cent since early May, along with big rises in other smaller digital currencies such as Ethereum's ether and Ripple's XRP.
"It should be noted that this a very different market today than it was in 2017," said Mr Moro.
"2017 saw an overwhelming number of ICOs (initial coin offerings), which was very distracting. 2019 has less distractions. It's also a different space because the CME bitcoin futures product wasn't available until December 2017."
ICOs refer to a fundraising scheme that bypasses banks and venture capital firms and involves startups creating their own tokens and selling them to the public.