Bitcoin rebounded from its rollercoaster weekend, with prices on track for the biggest gain in more than three months.
The world’s largest cryptocurrency was trading 12 per cent higher around $37,655 (€30,850) in mid-morning trading in New York. It climbed as high as $38,683. Digital currencies have been gripped by volatility in the past two weeks, with bitcoin prices plunging as much as 18 per cent on Sunday.
Traders may be feeling more positive as the crypto industry holds one of its biggest conferences of the year. Federal Reserve governor Lael Brainard noted at the Consensus conference that a big issue for central banks with regard to a digital currency is the impact on the financial system.
Digital dollars
If people can keep digital dollars in a wallet that’s unrelated to a bank account, and easily use that wallet to make payments and transfers, that then undermines the commercial banking system, Brainard said. It could starve the banks of deposits, which of course are vital for making loans, she noted.
Bridgewater’s Ray Dalio said there was little incentive right now to hold dollars with no interest being paid. Eventually people will go to “almost anything else” – stocks, gold, bitcoin and real estate, he said during the conference webcast.
“Love or hate it, bitcoin is impacting markets,” said Amy Wu Silverman, equity derivatives strategist at RBC Capital Markets, in a note Sunday.
Ether, the second-largest token, also rebounded on Monday, jumping 15 per cent to about $2,373.
The extreme volatility of late has prompted analysts to try guessing the outlook for digital currencies, with a JPMorgan Chase team saying it’s premature to call the end of the bitcoin selloff. Goldman Sachs signalled that extreme swings hamper crypto’s appeal for institutional investors. – Bloomberg
