LONDON (Reuters) – Bitcoin hit a record of $62,575 on Tuesday, extending its 2021 rally to new heights.
The world’s biggest cryptocurrency has more than doubled in price this year amid growing mainstream acceptance as an investment and a means of payment, and as investors seek high-yielding assets amid low interest rates.
Major firms including BNY Mellon, Mastercard Inc and Tesla Inc are among those to have embraced or invested in cryptocurrencies.
Reporting by Thyagaraju Adinarayan and Tom Wilson, Editing by Iain Withers
LONDON (Reuters) – HSBC has banned customers of its online share-trading platform from buying or moving into their accounts MicroStrategy Inc stock, a message seen by Reuters showed, calling it a “virtual currency product”.
The bank will not facilitate the buying or exchange of products related to or referencing the performance of virtual currencies, the message to an HSBC InvestDirect client said. Bitcoin is the largest and best-known virtual currency.
MicroStrategy declined to comment. The U.S. business software firm is led by bitcoin proponent Michael Saylor and owns bitcoin worth billions of dollars.
While HSBC will allow the holding, sale and outgoing transfer of MicroStrategy shares, it will forbid new purchases or incoming transfers, said the message dated March 29.
“HSBC has no appetite for direct exposure to virtual currencies and limited appetite to facilitate products or securities that derive their value from VCs (virtual currencies),” HSBC said in a statement.
HSBC InvestDirect is available to customers in countries including Canada and Britain.
The bank said its policy towards cryptocurrencies had been in place since 2018 and is kept under review. It could not immediately say which countries the ban applied to.
The move comes amid a growing embrace of cryptocurrencies by large financial firms, companies and investors seeking yield in a world of ultra-low interest rates.
Goldman Sachs Group Inc said last month it would offer investments in bitcoin and other digital assets to its wealth management clients. Morgan Stanley has also started offering clients investments to the emerging asset class.
MicroStrategy has along with Tesla Inc and payments firm Square Inc become one of several publicly listed U.S. companies to buy large amounts of bitcoin for its treasury.
MicroStrategy said last week it owns around 91,579 bitcoins. Its holdings, worth around $5.5 billion according to a Reuters calculation, are equal to around 80% of its $6.8 billion market capitalisation.
NEW YORK (Reuters) – Inflows into cryptocurrency funds and products hit a record $4.5 billion in the first quarter, suggesting increased institutional participation in the once-maligned sector, data from digital currency manager Coinshares showed on Tuesday.
The first quarter inflows represented an 11% increase from the last three months of 2020, which hit $3.9 billion.
Investments into crypto, however, slowed in the first quarter compared with the fourth, where growth was 240%, data showed. Coinshares said in the report, however, that this was not “indicative of a broader slowing trend, as quarterly growth rates tend to be highly varied.”
On Monday, the cryptocurrency sector hit an all-time peak of $2 trillion in market capitalization. Bitcoin’s market cap was more than $1 trillion, holding that milestone level for one whole week.
“There’s so much momentum that’s building and people are scrambling to see where the other coins, aside from bitcoin, are going,” said Edward Moya, senior market analyst at online FX trading platform OANDA.
Bitcoin had the most inflows in the first quarter with $3.5 billion, according to the Coinshares data, followed by ethereum, which posted $765 million in investments.
The largest cryptocurrency in terms of market cap hit a record high of $61,781.83 in mid-March, but has since traded in a narrow range as investors consolidated gains.
Crypto assets under management have also surged to a peak of $59 billion, CoinShares data showed. Last year, assets under management for the sector hit $37.6 billion.
Grayscale is still the largest digital currency manager, with $46.1 billion in assets, while CoinShares, the second biggest and the largest European digital asset manager, oversees about $5.1 billion in assets.
Of the $59 billion in assets under management, active investment managers represented just 1.5% of total assets under management, down from 3.6% at the start of the fourth quarter last year.
Total market volumes remained high during the quarter, averaging $11.6 billion per day, compared with $3.5 billion in the last three months of 2020.
LONDON (Reuters) – Bitcoin jumped to a one-week high on Monday, rising as much as 4.5% to $58,300 and nearing a record high above $61,000 hit earlier this month.
Visa Inc said earlier it would allow the use of cryptocurrency to settle transactions on its payment network, the latest sign of growing acceptance of digital currencies by the mainstream financial industry.
Wealthy baby boomers will be the next generation to jump into cryptocurrencies as they become more mainstream, potentially bringing billions of dollars to the rallying sector, said Mike Novogratz, founder of crypto firm Galaxy Digital.
“It could be as much as a trillion dollars comes over the next year from that giant group of wealth,” said Novogratz, who used to run hedge funds for investment giant Fortress, in an interview at Reuters Digital Assets Week.
Moves by major banks and trading platforms to begin offering cryptocurrency products to rich customers will likely spark the rush from wealthy baby boomers, Novogratz predicted.
Morgan Stanley this month become the first big U.S. bank to offer its wealthy clients access to bitcoin funds, including Galaxy Digital.
“The money will start coming in early next month,” he said of the Wall Street bank’s move.
Baby boomers, born roughly from the end of World War Two to the mid-1960s, have been the chief beneficiaries of massive stimulus programmes that have pumped up asset values since the 2008-9 global financial crisis.
Bitcoin powered to a record of nearly $62,000 this month, the latest milestone in a meteoric rise driven by growing adoption from major companies such as Tesla Inc and the embrace of bigger U.S. investors.
Yet most of the interest has so far come from younger investors comfortable with the concept of digital assets.
Many of them see bitcoin both as an asset that can dramatically appreciate in value and also one that can protect savings from the threat of inflation sparked by money printing.
Bitcoin, originally designed as a way to pay, is less of a currency than an asset that works best to store value, said Novogratz, a vocal proponent of cryptocurrencies.
“If you’re worried that the U.S. is printing too many dollars…you’re going to shift some of your savings into bitcoin.”
The electric-car maker had last month said it bought $1.5 billion of bitcoin and would soon accept it as a form of payment for cars, sending the price of the world’s most popular cryptocurrency soaring.
Musk, who has been promoting cryptocurrencies through his Twitter account, had last month criticized conventional cash, saying when it “has negative real interest, only a fool wouldn’t look elsewhere.”
He had said that the difference with cash made it “adventurous enough” for the S&P 500 company to hold the cryptocurrency.
Following Tesla’s investment in bitcoin, several companies, including Uber Technologies Inc and Twitter Inc had shared their views on the cryptocurrency. reut.rs/3cg9gMP
Uber Chief Executive Dara Khosrowshahi said the ride-hailing company discussed and “quickly dismissed” the idea of investing in bitcoin. However, he added that Uber could potentially accept the cryptocurrency as payment.
Twitter had said earlier it was still undecided in holding bitcoin, while General Motors Co said it will evaluate whether bitcoin can be accepted as payment for its vehicles.
Tesla recently added “Technoking of Tesla” to Musk’s list of official titles.
TOKYO (Reuters) – Bitcoin consolidated around $60,000 on Monday, taking a breather from the weekend’s record high as investors prepared for inflation worries and U.S. stimulus spending to propel it even higher.
The world’s most popular cryptocurrency slipped as low as $58,956.90 early in the Asian session, falling from Saturday’s record high of $61,781.83.
The rally may have been dampened by a Reuters report that India would pursue a ban on digital assets, a rain cloud for bitcoin following high-profile endorsements this year from the likes of Tesla’s Elon Musk, Twitter’s Jack Dorsey, and investment giants Goldman Sachs and BlackRock.
Bitcoin has more than doubled in 2021, after quadrupling last year.
“Investment by institutional investors and corporates is increasing. It’s what I call the financialisation of bitcoin,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
“It’s becoming an asset that investors can no longer ignore.”
Bitcoin’s weekend surge was helped by an improvement in risk appetite in financial markets after President Joe Biden signed his $1.9 trillion fiscal stimulus package into law and ordered an acceleration in vaccinations.
That momentum carried into thinner markets on the weekend, with technical factors magnifying the move higher, according to Justin d’Anethan, sales manager at digital asset company Diginex in Hong Kong.
“The crypto market is derivatives heavy,” he noted.
“A small move up triggered many liquidations throughout Saturday and Sunday, thus becoming a not-so-small move.”
Seth Melamed, the Tokyo-based chief operating officer of cryptocurrency exchange Liquid, said legislation of the sort India is proposing won’t be an impediment to further gains for bitcoin.
“Because it’s decentralised, government bans or acceptance is somewhat irrelevant,” Melamed said. “Capital will find a way.”
MOSCOW (Reuters) – Four thousand kilometres from Moscow near the shores of the Angara River, a Russian firm operating a vast data centre run on cheap local hydroelectric power is reaping the rewards of bitcoin’s surging prices and plans to double its power output this year.
BitRiver hosts equipment at its flagship 100-megawatt data centre in the city of Bratsk, along with other smaller sites, for foreign miners of the cryptocurrency from the United States, Europe and Japan who want to harness the region’s cheap energy.
The company could already be responsible for as much as 2% of global bitcoin mining, Chief Executive Igor Runets estimated, but added precise figures in the sector were hard to come by.
The price of bitcoin has risen almost 300% since the start of November and topped $50,000 dollars for the first time last month, as Tesla Inc bought $1.5 billion worth of bitcoin and other large companies and investment houses followed small traders into the asset.
Bitcoin is earned — or ‘mined’ — by using your computer to help process the uncrackable “blockchains” or digital transaction records that underpin the currency.
This requires huge computing capacity, and a lot of electricity, and so is mostly done with huge machines in aircraft hangar-sized warehouses in the cooler climates of Iceland, Canada, northern China and Russia, where it costs less to disperse the heat generated.
The rewards for those who can verify transactions in the process which produces bitcoins have never been greater.
“Current demand from our clients exceeds 700 megawatts and is approaching one gigawatt,” said Runets. “We will of course continue to build data processing centres. In 2021, we plan to reach 300 megawatts of power.”
Another 100-megawatt centre is already under construction in the neighbouring Buryatiya region, Runets said.
Big deals with foreign firms, such as one last December which saw 14 lorries full of equipment arrive in Bratsk, can boost the local economy and are a sign that BitRiver has become a global player, he said in a company video.
Russia granted cryptocurrencies legal status last year, but banned them from being used as a means of payment.
“Current legislation in Russia does not hamper us in any way,” Runets said. “It allows us to host foreign clients’ computing equipment on Russian territory with settlements for this in dollars or roubles.”
This arrangement reduces the financial impact of bitcoin price swings on BitRiver.
“When bitcoin falls or rises, my profit, my revenue remains almost unchanged,” Runets said. “This financial stability in a volatile market is very valuable.”
More liberal legislation would lead to greater investment from Russian players, Runets added, which could help BitRiver improve on its 2.5x year-on-year revenue growth in 2020. He declined to disclose further financial details.
One of the primary concerns levelled at bitcoin miners is their carbon footprint. Runets said BitRiver uses more than 90% green power as it builds data centres in regions with electricity surpluses and renewable energy sources nearby.
Russia accounts for about 7% of the world’s bitcoin mining, according to Alexander Brazhnikov, executive director of the Russian Association of Cryptoeconomics, Artificial Intelligence and Blockchain, a figure that does not include grey-market players and those illegally connecting to power grids.
Kazakhstan is responsible for a similar figure, while China is the market leader.