Bitcoin rose above the $54,000 mark, up about $2,000 in 24 hours, as its total market cap topped $1 trillion. Bitcoin’s price has now risen about 350 percent in the past six months. Prior to the recent spike, the digital asset had never traded above $20,000. Ether is up 2%.
U.S. blockchain concept stocks surged collectively, with Renren up about 40%, Jia Nan Cai Zhi and Xunlei up more than 30%, both up 280% cumulatively so far this year; Ninth City up 24%, up 2126% cumulatively so far this year, and Cheetah Mobile and China Net Carriers up more than 13%.
On Feb. 19, Wall Street saw a new hype on bitcoin as the world’s first bitcoin ETF, the Purpose Bitcoin ETF (BTCC), was listed for trading on the Toronto Stock Exchange.
This week, tesla founder Musk tweeted that bitcoin is a “not so stupid” form of liquidity. “When real interest rates on fiat money are negative, fools don’t look elsewhere,” Musk said, referring to negative-yielding bonds that result in negative cash returns.
Of course, there are bigwigs who are not so bullish on bitcoin.
Citadel CEO Ken Griffin says he doesn’t think bitcoin is the future of the financial markets.
I don’t spend much Time thinking about cryptocurrencies,” he said. I don’t see the economic basis for cryptocurrencies. I understand how to value stocks – the net present value of earnings. I know how to think about Exchange Rates around the world. I don’t know how to think about digital tokens.”
It is worth noting that while many Wall Street investment institutions are enthusiastic about Bitcoin, they are using it more as a trading profit vehicle and have yet to incorporate it into their long-term holdings as a reserve asset due to the regulatory uncertainty associated with Bitcoin’s high price volatility.
The current regulatory outlook for Bitcoin is still highly uncertain, and the regulatory environment is critical to Bitcoin’s ability to gain widespread popularity and trust in the broader marketplace. In the long run, however, the ability of cryptocurrency transactions to become legal and compliant will be pivotal to its future development.
Tim Lane, deputy governor of the Bank of Canada, noted that the recent spike in bitcoin prices is more of a speculative mania than a trend.
Meanwhile, U.S. financial regulators are still turning away bitcoin ETF applications from VanEckAssociates corp, Bitwise Asset Management and other institutions because U.S. financial regulators believe that bitcoin trading suffers from price manipulation and inadequate trading infrastructure.
Gabriel Makhlouf, a member of the European Central Bank’s Management Board, warned that “the value of existing cryptocurrencies is likely to go to zero once regulatory measures are tightened and competition from the introduction of multi-national central bank digital currencies (CBDCs) is introduced. Investors holding cryptodigital currencies will, as a result, lose their assets.”
It is worth noting that more and more national financial regulators are advancing the research and development of central bank digital currencies (CBDCs) so as to avoid the above-mentioned risks. Data shows that about 80% of central banks worldwide are currently engaged in CBDC research, experimentation and development, and 10% of countries have gone live with pilot projects. In addition, international organizations such as BIS, IMF and G7 Group are accelerating joint research on CBDC and promoting the establishment of international cooperation and standards.
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