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Bitcoin rose to a record high on Wednesday, a day after the
cryptocurrency crossed the $ 50,000 mark, even as analysts warned of the
sustainability of these prices amid increased volatility.
The world's largest digital currency, with a market value of more
than $ 900 billion, reached a record high of $ 51,175, supported by signs that
it is gaining acceptance among investors and major companies, such as: Tesla
and MasterCard.
Despite the prevailing wave of acceptance this year, some analysts
have warned that Bitcoin is still far from becoming a widely used payment
method.
Mark Haefele, chief investment officer at wealth management company
UBS, said: We advise investors not to view this as a mainstream cryptocurrency
moment, and we advise caution before engaging in speculation because crypto is
not a currency.
He added: We also don't think that platform companies with existing
internal payment systems might jump into the crypto space.
Bitcoin has increased eightfold since last March, and has added more
than $ 700 billion in market capitalization since September.
Investment banking firm JPMorgan questioned the size of the jump on
the back of a total inflow of just $ 11 billion from institutional investors.
JPMorgan analysts said: The limited supply of Bitcoin - based on the
two minerals - has led its holders to impose a premium on the market for
Bitcoin, and that retail flows may have increased the size of institutional
flows.
“We have closely monitored the apparent imbalance between supply and
demand over the past two months as there has been a significant spike in
institutional interest,” said Brian Melville, director of strategy at
Cumberland, the crypto arm of DRW trading in Chicago.
However, the prices of the major digital currency are not sustainable
unless its volatile price fluctuates quickly, said JPMorgan analysts, who last
month pointed to the emergence of Bitcoin as digital gold.
They said: Bitcoin, at current market prices, has more than doubled
compared to gold in terms of risk capital, noting the volatility of the digital
currency for three months, at 87 percent versus 16 percent for gold.
Separately, US securities firm Wedbush said it sees less than 5
percent of public companies heading toward a Bitcoin investment path in the
next 12 to 18 months.