London — Bitcoin jumped to a new high on Friday, a day after soaring past the price of an ounce of gold for the first time. One unit of the virtual currency was trading above $1,292.71 at 7.30am in New York, compared with $1,226.89 for an ounce of gold. The metal has had a terrible week, declining for the fourth time in five days.
The latest surge in bitcoin’s value has been attributed to tighter currency restrictions in countries such as China, India and Venezuela, as well as speculation about prospects under the Trump administration.
China’s three biggest bitcoin exchanges suspended withdrawals last month after pressure from the People’s Bank of China, which was concerned that people were using bitcoin to move money out of the country, side-stepping official efforts to shore up the yuan.
Investors may also be betting on a more relaxed regulatory environment under US President Donald Trump. The US Securities and Exchange Commission is expected to rule on a proposal for an exchange-traded fund (ETF) based on the digital currency by March 11. "Some people may be front-running what they see as the ETF demand down the road," said John Butler, head of wealth services for Goldmoney, in an interview.
Bitcoin still has a lot to prove, he said: "We’re a long way from bitcoin establishing its properties as anything that could be considered to be a reasonably stable store of value. The fact that it’s passing through gold is just arbitrary."
In January, the volatile crypto-currency passed its 2013 peak of $1,137. After the previous peak, it fell 53% in less than a month. Commerzbank analyst Carsten Fritsch noted "the small size of the [bitcoin] market" and "low level of distribution, the lack of general understanding of the concept, the short history of bitcoin, its extreme price volatility and the high proportion of speculators".
Bloomberg
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