Bitcoin has surged almost 25% since last week.

By Jen Wieczner 

October 20, 2017

The Bitcoin price hit a new all-time high Friday, breaking $6,000 for the first time on all the major cryptocurrency exchanges.

As of 4 p.m. Friday, Bitcoin was up about 7% over a 24-hour period, trading at as much as $6,060. At that level, Bitcoin’s total market value is now more than $100 billion, easily exceeding the market cap of Goldman Sachs (GS, +1.90%) .

The surge comes just a week after Bitcoin reached a record price for the first time in more than a month, surpassing $5,800 after rising as much as $1,000 in less than 48 hours. Until then, Bitcoin had traded well below its previous high of $5,000, which it briefly touched in early September before retreating 20% over the next few days.

Bitcoin initially breached the $6,000 threshold Friday morning at only one exchange, Hong Kong-based Bitfinex, where investors can buy and sell cryptocurrencies such as Bitcoin and Ethereum. After remaining just a few dollars shy of the mark at other digital currency exchanges such as Coinbase, which is headquartered in San Francisco, Bitcoin officially crossed the milestone on all trading venues just as U.S. stock markets closed Friday.

The bounce comes just two days after a Russian economic official derided Bitcoin as “worse than casinos,”prompting its price to drop as low as $5,174 on Wednesday. Since then, Bitcoin’s price has risen 16%. Over the past 10 days, it has gained more than 24%.

The cryptocurrency’s rally comes despite other disparaging comments by influential figures including former Federal Reserve chair Ben Bernanke (who suggested this week that Bitcoin would fail) as well as criticism by J.P. Morgan CEO Jamie Dimon.

Still, Bitcoin bulls are setting their sights on the potential release of a Bitcoin exchange traded fund, a product that would trade on the regular stock market, opening up the digital asset to a broader array of investors. One attempt to launch a Bitcoin ETF was rejected by the U.S. Securities and Exchange Commission earlier this year, but plans for others are in the works. A representative for Digital Currency Group, the investment firm backed by entrepreneur (and Bitcoin advocate) Barry Silbert, said last week it was currently in talks with the SEC about launching its own publicly traded product, despite withdrawing its application for a listing last month.

Also, cryptocurrency investors are preparing for another Bitcoin hard fork next week, in which enthusiasts are planning to split off a second version of the digital currency known as Bitcoin Gold. The last time a Bitcoin hard fork occurred was in August, when a new currency called Bitcoin Cash was created from the original Bitcoin blockchain. In the wake of the fork, both the price of Bitcoin and Bitcoin Cash soared, making some investors see the next split as a buying opportunity to end up with two currencies for the price of one.

Banks look to tap into bitcoin market

Bitcoin, a decentralized currency that sidesteps regulators, has surged more than 300 per cent this year, drawing the attention of hedge funds and investors.

The qualities that have made bitcoin the payment form of choice for drug deals and ransom demands — it runs on a decentralized web of computers around the world that sidesteps regulators and banks — are also what makes it hard for governments to control.  (MARK LENNIHAN / THE ASSOCIATED PRESS FILE PHOTO)  

By HUGH SONBloomberg

Thu., Oct. 5, 2017

NEW YORK—At first, bitcoin was a way to make payments without banks. Now, with more than $100 billion (U.S.) stashed in digital currencies, banks are debating whether, and how, to get in on the action.

Goldman Sachs Group Inc. chief executive officer Lloyd Blankfein tweeted Tuesday that his firm is examining the cryptocurrency. Other global investment banks are looking into facilitating trades of bitcoin and other cryptocurrencies, according to industry consultants. Bitcoin has surged more than 300 per cent this year, drawing the attention of hedge funds and wealthy individuals.

Read more:

JPMorgan CEO says ‘fraud’ bitcoin currency ‘won’t end well’

Bitcoin’s anonymity appeals to HBO hackers

Article Continued Below

Will bitcoin replace the loonie? Don’t bank on it: Olive

“They’re clearly receiving interest from their clients, both from retail investors and on the institutional side,” said Axel Pierron, managing director of bank consultant Opimas. “It’s highly volatile, it’s highly illiquid when you need to trade large volumes, so they see the opportunity for a new asset class which would require the capability of a broker-dealer.”

But bitcoin presents Wall Street with a conundrum: How do banks that are required by law to prevent money-laundering handle a currency that’s not issued by a government and that keeps its users anonymous?

The debate has played out in the open recently, with JPMorgan Chase & Co. CEO Jamie Dimon and BlackRock Inc. CEO Larry Fink saying that bitcoin was mostly used by criminals, while Morgan Stanley chief James Gorman took a more measured stance, saying it was “more than just a fad.” On Wednesday, UBS Group AG chairman Axel Weber, a former president of Germany’s central bank, said he was skeptical about bitcoin’s future because “it’s not secured by underlying assets.”

There’s even tension within some banks. On the same day Dimon trashed bitcoin, calling it a “fraud,” his firm’s private bank hosted a panel stocked with cryptocurrency investors.

Handling bitcoin would invite scrutiny from every major U.S. regulator, according to Joshua Satten, director of emerging technologies at Sapient Consulting.

“From the perspective of the U.S. Treasury, do you classify it as an asset class or a currency?” Satten said. “If banks are starting to manage and hold bitcoin for their clients, you would have the OCC and the FDIC looking at how they classify the assets on their balance sheet and how they state the assets for the portfolio of a client.”

And banks need to avoid antagonizing governments that are increasingly concerned about this area. For instance, China is cracking down by shutting cryptocurrency exchanges.

Then there’s the risk that stems from its high volatility and lack of correlation to other major assets. “What are they going to do if bitcoin drops for a given client and they’ve given that client a ton of leverage on margin, and that client only has assets in bitcoin?” Satten said.

Derivative contracts could help. CBOE Holdings Inc., the owner of the Chicago Board Options Exchange, announced in August that it plans to introduce bitcoin futures this year or next. That could help traders hedge positions. Banks are also exploring creating derivatives and using bitcoin in international trade finance to avoid exchanging currencies, Pierron said.

What isn’t in doubt is the interest from some investors. Hedge fund manager Mike Novogratz plans to start a $500-million hedge fund to invest in cryptocurrencies, initial coin offerings and related companies, which would be the largest of a growing group. There are 75 funds investing in the space, according to Autonomous Research.

Bitcoin already has a toehold in mainstream finance. In July, Falcon Private Bank said it was the first Swiss bank to offer bitcoin asset management to its clients. In the U.S., both Fidelity Investments and USAA let clients view their bitcoin balances if their accounts are linked to the Coinbase exchange.

The qualities that have made bitcoin the payment form of choice for drug deals and ransom demands — it runs on a decentralized web of computers around the world that sidesteps regulators and banks — are also what makes it hard for governments to control. Further adoption of bitcoin may require central banks and regulators to come to a consensus on how the new digital currencies fit into the existing framework.

“Can it be sanitized for the reserve banks and regulators and compliance departments of banks around the world so that you can root out the grey money, the stuff that you hear about coming from darknet markets?” Jesse Chenard, CEO of blockchain startup MonetaGo, said Tuesday at a conference held by Columbia Business School. Banks need “to have some assurances of who they’re transacting with and the provenance of that coin.”