Even though investors are growing cautious, the price for Bitcoin is within spitting distance of its all-time high and it broke through $1,300 on Thursday.
According to CoinDesk data, on hopes that U.S. regulators would approve a key trading product for the digital currency, the cryptocurrency’s price spiked yesterday to $1,306 and on the overall the price has risen around 4.5 percent since the start of the week. And the price is not far from its all-time high of $1,325, which it hit on March 10 as it is back around $1,300 even though the price fell overnight.
However, there are growing concerns among some bitcoin investors. According to Bitfinex data, currently there are around 6,000 more short positions than long positions on bitcoin and the buy and sell ratio for bitcoin is balanced almost evenly over the past 24 hours. It led to sharp sell-offs whenever in the last few times bitcoin has tested these levels and this has made the investors more cautious. Bitcoin fell to $1,085 on March 10. Later, over the course of a few days, the digital currency dropped from around $1,260 to $950 later in March.
Optimism after an announcement in the U.S. that the Securities and Exchange Commission (SEC) is reviewing its decision to reject a bitcoin exchange-traded fund (ETF) proposed by Cameron and Tyler Winklevoss is the reason for the recent climb in bitcoin prices.
An application by the Winklevoss twins to list the ETF on the Bats BZX exchange was declined by the SEC last month. While disappointment could bring bitcoin prices back down, hopes that the application will get another shot at approval once the decision is reviewed has resulted in a rise in the price of the cryptocurrency.
However, others remain bullish. The price of the cryptocurrency could reach as high as $3,000 this year, predicts Pavel Matveev, co-CEO of blockchain personal finance platform Wirex.
“Bitcoin has doubled in value in the past six months. The trend for financial regulation, which recognises bitcoin, is spreading across Asia-pacific, and we expect more and more countries to regulate virtual currencies. I believe the price will continue growing and reach as much as $2,000 to $3,000 by the end of the year,” he said.
Japan’s recent decision to recognize bitcoin as legal tender are among the other factors that will boost bitcoin, he added.
“Bitcoin does face certain challenges such as negative perceptions stemming from past instances of hacking and other illegality. The Japanese financial system will also face a steep learning curve regarding how to report bitcoins in accounts, for example,” he added.
“At the same time bitcoin is rapidly integrating such challenges and is increasingly becoming more robust, as Japan’s official recognition of the cryptocurrency suggests. Integration into the financial system means companies can now more easily develop products and services.”
(Adapted from Bloomberg)