Bitcoin climbed higher on Thursday amid signs of booming institutional adoption led by BNY Mellon.
The oldest bank in the United States announced that it would hold, transfer, and issue Bitcoin on behalf of its asset management clients via a platform that is still in making. It is already in talks with existing clients to bring their cryptocurrency holdings into its custody.
Roman Regelman, chief executive of BNY Mellon’s asset-servicing and digital businesses, noted that digital assets like bitcoin are gradually becoming a part of the mainstream. He added that their services would provide asset managers, hedge funds, and other institutional investors to gain exposure in the cryptocurrency market without having to worry about security, regulation, and stability risks.
All-Time High for Bitcoin
Bitcoin reacted positively to the news. The benchmark cryptocurrency posted a recovery rally on Thursday, securing a new all-time high at $48,373 as traders assessed the prospects of its growing institutional adoption. A day earlier, credit card giant MasterCard had also announced that it would integrate crypto payments into its existing services.
Meanwhile, on Monday, US carmaker Tesla revealed in its securities filing that it bought $1.5 billion worth of Bitcoin units as an alternative to its cash reserves. On that day, the BTC/USD exchange rate jumped by almost 20 percent, later hitting an all-time high of $48,200 on Coinbase.
“It’s hard to keep up with all the bullish news on Bitcoin, but we’re facing $50,000 relatively soon,”said Michaël van de Poppe, an independent market analyst.
Safe-Haven Demand to Rocket?
More tailwinds came from Jerome Powell’s speech on Wednesday during the Economic Club of New York’s virtual conference. The Federal Reserve Chairman painted a bleaker picture for the US labor market, warning that the real unemployment rate in the country is closer to 10 percent.
The official figures provided by the US Bureau of Labor Statistics showed the jobless rate at 6.3 percent last week, driving a rally in the riskier markets on prospects of faster-than-expected economic recovery.
“The Bureau of Labor Statistics reports that many unemployed individuals have been misclassified as employed,” Mr. Powell said. “Correcting this misclassification and counting those who have left the labor force since last February as unemployed would boost the unemployment rate to close to 10 percent in January.”
Bitcoin does well during times of uncertainty. Poor labor data means the Fed and the US government would need to print more dollars to aid the unemployed. That would reduce the greenback’s purchasing power. In turn, it would help safe-havens such as gold and Bitcoin perform better.