Bitcoin races past $5000 to a new all-time high

Richard Branson CEO of Virgin Galactic which accepts bitcoin as a form of payment

Richard Branson CEO of Virgin Galactic which accepts bitcoin as a form of payment

This morning Bitcoin shot past $5,000, and is now hovering around $5,300 - up almost 10% from yesterday.

Bitcoin's valuation has surpassed $5,000 for the first time on Thursday.

Bitcoin's rival ethereum rose 1.93 percent to $307. The digital currency plunged below $3,000 in mid-September after the Chinese authorities announced a crackdown. And as a new asset with a smaller pool of investors, cryptocurrencies are subject to wild swings in value. On Wednesday, Russian President Vladimir Putin warned of the risks surrounding the cryptocurrency market.

Bitcoin nearly reached US$5000 at the start of September, but fell back sharply after the head of Goldman Sachs blasted the cryptocurrency as a "fraud" and as China forced exchanges to close down, sparking fears of a broader crackdown. Nettles said interest had been much higher than anticipated and has come from banks, hedge funds and brokers. The decline was fueled by a comment from JPMorgan & Chase CEO Jamie Dimon who called bitcoin a fraud good for drug dealers and murderers.

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"It is folly to think that bitcoin will ever be allowed to supplant central-bank-issued money", he wrote in The Guardian. "So to us, this bounce back in price is no surprise", the analyst added. "But it is an entirely different matter for governments to allow large-scale anonymous payments, which would make it extremely hard to collect taxes or counter criminal activity".

"People are just wanting to be part of it", said Ryan Nettles, head of FX trading and market strategy at Swiss bank Swissquote, which launched bitcoin trading two months ago.

"Investors buy [an] asset because they are seduced by the prospect of further rapid gains without necessarily thinking about intrinsic value", he said.

Unlike a real-world unit such as the USA dollar or euro, bitcoin has no central bank and is not backed by any government. None of this applied to bitcoin, although the supply is carefully controlled. "Individuals are already able to transact electronically using a plastic card".

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