Bitcoin’s gains have been fuelled by signs it is gaining acceptance among mainstream investors and companies, from Tesla and Mastercard to BNY Mellon.“If you really believe there’s a store of value in bitcoin, then there’s still a lot of upside,” said John Wu, president of AVA Labs, an open-source platform for creating financial applications using blockchain technology.Article content
Still, many analysts and investors remain skeptical of the patchily regulated and highly volatile digital asset, which is little used for commerce.Analysts at JP Morgan said bitcoin’s current prices were well above estimates of fair value. Mainstream adoption increases bitcoin’s correlation with cyclical assets, which rise and fall with economic changes, in turn reducing benefits of diversifying into crypto, the investment bank said in a memo.
Bitcoin is an “economic side show,” it added, calling innovation in financial technology and the growth of digital platforms into credit and payments “the real financial transformational story of the COVID-19 era.” On Thursday, Tesla boss Elon Musk – whose tweets have fuelled bitcoin’s rally – said owning the digital coin was only a little better than holding cash. He also defended Tesla’s recent purchase of US$1.5 billion of bitcoin, which ignited mainstream interest in the digital currency.Article content
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