Bitcoin surges to another high of $52,000; sustainability concerns rises

Bitcoin surged to another record high on Wednesday, a day after the virtual currency vaulted to the $50,000 hurdle, even as analysts warned against the sustainability of such prices amid elevated volatility.

The world’s biggest digital currency, with a market capitalization of over $900 billion, hit a record of $52,577.50, fueled by signs it is winning acceptance among mainstream investors and companies, such as Tesla, Mastercard and BNY Mellon.

Bitcoin was last up 6.3% at $52,233. Despite the flurry of mainstream acceptance this year, some analysts warned that Bitcoin was still far from becoming a widely used form of payment.

Bitcoin has risen eightfold since last March and has added more than $700 billion in market value since September. JPMorgan questioned the “magnitude” of the jump on the back of a total flow of just $11 billion from institutional investors. Its limited supply based on “miners” producing a set number of new coins has led to holders charging a premium on Bitcoin coming to market, JPMorgan analysts said in a note. Retail flows may have also magnified institutional flows, they said.

Bitcoin’s prices though aren’t sustainable unless its volatile price swings cool down quickly, said the JPMorgan analysts, who last month flagged the asset’s emergence as digital gold. “Bitcoin, at current market prices, has already more than doubled relative to gold in risk capital terms,” they said, pointing to the digital coin’s three-month realized volatility, at 87% versus 16% for gold.

BlackRock’s chief of global fixed income, Rick Rieder, told CNBC on Wednesday the world’s largest asset manager has started to “dabble a bit” in Bitcoin.

Anthony Scaramucci, founder and managing partner of hedge fund SkyBridge Capital and former communications director under the Donald Trump administration, also told CNBC in Wednesday he sees Bitcoin hitting $100,000 per unit before the year ends, citing supply and demand. SkyBridge is also invested in Bitcoin.

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