Following the announcement by BNY Mellon that it had constituted a special unit that would help its clients to BNY Mellon, the value of the crypto currency bitcoin surged to a new all-time high on Thursday.
The bank said that the new unit that it has is setting up will start to offer its services some time later this year.
On Thursday, the value of bitcoin touched a record high of $48,481.45 and druged by 6.9 per cent at $47,932 at the end of the trading day.
So far this year, the value of the largest crypto currency of the world in terms of market capitalization has surged by about 66 per cent while since the middle of March last year, it has recorded an astronomical surge of about 1,200 per cent.
This latest surge in the value of bitcoin came a few days after the United States based electric car maker Tesla said that it had bought bitcoin worth $1.5 billion worth and was in the process of allowing its customers to pay for its cars in the crypto currency.
It seems that bitcoin has finally entered the mainstream after being shunned by traditional financial firms for a long time.
Bitcoin was added as an eligible investment to two funds last month by the largest asset manager of the world BlackRock Inc. And in the latest good news for the crypto currency, payments and credit card giant on Mastercard Inc said a day ago that it was planning to offer support for some cryptocurrencies on its network stating later this year.
Corporations were hedging themselves against the possibility that bitcoin succeeds, said Luca Paolini, chief strategist at Pictet Asset Management.
“And so companies probably do what some retail investors are doing, to say well this bitcoin will probably fail, but there is still a low chance that it may not fail. And so, they want to be part of it,” he said in an interview to the media.
On Wednesday, an all-time high was also struck by bitcoin’s rival crypto currency ethereum at corporations were hedging themselves against the possibility that bitcoin succeeds and it saw an appreciation of 3 per cent on Thursday reaching a value of $1,793.88. This surge was propelled by the beginning of the crypto currency’s future trading a few days ago on the Chicago Mercantile Exchange.
However caution has been advised by some market participants.
“Investors must remember that bitcoin is not a simple, get-rich-scheme. In reality, it has been, and will continue to be, susceptible to downward price swings – especially when the short-term winners look to withdraw their earnings,” said Gavin Smith, chief executive officer of cryptocurrency consortium, Panxora Group.
“While another upwards price run is on the horizon, investors should remain cautious and look to implement a steady risk management strategy,” he added.
(Adapted from Nasdaq.com)