After breaking the $50,000 per coin threshold early this week, the Bitcoin has managed to hover around $51,500 for the rest of the week on the back of renewed public and interest.
"In my view, the only way is up," eToro crypto assets analyst Simon Peters told Business Times, who believes the price of Bitcoin could soon brush $70,000.
"Realistically, the currency could aim even higher based on its impressive 2021 performance thus far," he added.
But investors in the cryptocurrency which has no sovereign and runs on a digital ledger system, must contend with volatility that once saw the price of Bitcoin up by nearly 40% in a day.
"Bitcoin's three-month realized volatility, or actual price moves, is 87% versus 16% for gold," said research note by investment bank JPMorgan published on Tuesday.
This most recent rally, which pushed Bitcoin's value from around $30,000 to over $50,000 in less than a month, is largely due to electric vehicle manufacturer Tesla.
The company announced the purchase of $1.5 billion in Bitcoin as part of its cash holdings in a Securities and Exchange Commission filing on Feb. 8, becoming the latest major group to publicly back the cryptocurrency
"It has to be said, the recent news that the powerful, multinational corporations queuing up to lend their support is no doubt buoying the market," Peters noted.
Days after Tesla's announcement, Mastercard Inc. said on Feb. 10 it would be bringing "select cryptocurrencies" to its network for customers to pay with, while users of online payments provider PayPal have been able to transact with Bitcoin since late 2020.
Other Companies Join In
Increased corporate interest has renewed public curiosity in cryptocurrencies.
"We received many inquiries from individual investors or friends asking us about how they can buy Bitcoin after the price passed $50k," Flex Yang, founder and chief executive of Hong Kong-based crypto lender and investment group Babel Finance, said in an interview with Business Times.
The firm, which doesn't offer any fiat-based services and reported roughly $1.2 billion in outstanding loans and $240 million in assets under management as of December 2020, also saw a surge in institutional interest.
"[In the last three months] the total number of institutional clients we've served has increased from 10 to 90," said Yang.
Globally, institutional investors' enthusiasm for Bitcoin has been steadily growing over the past year.
Twitter founder Jack Dorsey's financial firm Square acquired nearly 5,000 Bitcoins in October 2020 - costing roughly $50 million at the time - and two months later, Massachusetts Mutual Life Insurance bought $100 million worth.
The Tesla announcement preceded another flurry in activity; last week Bank of New York Mellon, the oldest bank in the U.S., said it would begin holding, transferring and issuing Bitcoin on behalf of its asset-management clients.
"It now feels inevitable that more institutions will follow the likes of BNY Mellon, which will increase the value of the asset," said Peters.
To be sure, Bitcoin, like other cryptocurrencies, has a long way to go before it can ever be widely used as a payment method.
"Currently the majority of investors are holding Bitcoin speculatively," said Peters, acknowledging that the mainstream use of cryptocurrencies is still a long way off.
Only 14,000 shops around the world offered it as a payment method in 2020 and further adoption will depend on closer cooperation between financial regulators, retailers and cryptocurrency exchanges.
HK vs. Singapore
Singapore state-owned bank DBS announced the roll out of a digital trading service allowing users to buy and sell a range of cryptocurrencies including Bitcoin and Ethereum.
In Hong Kong, regulators are taking a different approach to crypto. The city's Securities and Futures Commission unveiled a plan late last year to license cryptocurrency exchanges as part of a global money laundering prevention initiative.
Under the proposal, investors with less than HK$8 million ($1.03 million) in assets would be banned from buying or trading cryptocurrencies.
This drew the ire of Hong Kong-based crypto finance companies, including Babel.
"I believe it is imperative for [the] SFC to design a regulatory framework not only with professional investors in mind but with retail investors as well," said Yang. "Uneven treatment toward investors may hamper the growth of the industry."
"Limiting crypto trading opportunities only to professional investors, [Hong Kong] risks losing market competitiveness in comparison to Singapore," he added.
"As one of the few places offering a regulatory sandbox, Singapore creates a welcoming space for FinTech companies to test and improve their products and services."
"Looking ahead, we are optimistic about the future of Hong Kong as Asia's financial hub and the potential of our business to flourish by becoming the perfect gate-way for investors, asset managers, and traders to enter the crypto space," said Yang.
"In order to become the hub for the future crypto industry, Hong Kong needs to do more to attract companies and talents with available resources," said Yang.
"The creation of the Singapore Blockchain Innovation Programme (SBIP), which involves startups and multinationals like IBM, positions the country as a leader in blockchain-related to trade, logistics, and supply chain."
"The crypto industry is still in its early stage of development despite passing the 50k price ceiling this week. We fully support the regulator's effort to enhance AML rules and anti-terrorism financing guidelines, but we hope regulators will successfully strike a balance between the stability of the market and innovation in the fintech space."