Bitcoin Tops $9,000 as Crypto Rally Trounces Stocks, Bonds, Gold and Oil
June 17 2019 - 10:03AM
Dow Jones News
By Steven Russolillo
The price of bitcoin rose above $9,000, extending a rebound that
has made cryptocurrencies far outperform traditional asset classes
this year.
Bitcoin climbed to $9,381.82 over the weekend, a 13-month high,
according to research site CoinDesk. While stocks, bonds, gold and
oil are all up this year, bitcoin's rally trounces them all.
Prices for bitcoin and rival digital currencies collapsed last
year. Investors cite more institutional support for
cryptocurrencies, escalating U.S.-China trade turmoil and Facebook
Inc.'s planned digital coin as catalysts for the latest move
higher.
Facebook has signed up more than a dozen companies including
Visa Inc., Mastercard Inc., PayPal Holdings Inc. and Uber
Technologies Inc. to back its cryptocurrency, The Wall Street
Journal reported on Friday. The digital coin, called Libra, is set
to launch next year.
Though bitcoin and the underlying blockchain technology are
hardly used for payments, Facebook is betting that its giant social
network with billions of users will gravitate toward its
crypto-based payments system. And investors say a company of
Facebook's stature using a cryptocurrency gives the industry wider
appeal.
"When big, important companies get involved, crypto enters the
zeitgeist in a different way," said Rayne Steinberg, chief
executive and co-founder at Arca, an asset-management firm that
invests in digital currencies.
He said the U.S.-China trade tensions have been a positive
catalyst for bitcoin. Bitcoin was formed about a decade ago as a
decentralized, autonomous network which isn't controlled by any
individual, company or government. That has made it particularly
attractive to some investors who have grown disenchanted with the
world's two largest economies engaging in a bitter trade
dispute.
"In this digital world where you have an unseizable,
unmanipulatable, uninflatable asset that acts as a store of value,
there is going to be a demand for that," Mr. Steinberg said.
Additionally, bitcoin has separated itself from most other asset
classes on a performance basis. The S&P 500 is up 15% this
year, crude-oil futures have gained 16% and gold futures are up
4.8%. Bitcoin, meanwhile, is up 154%, although it is still well
below its all-time high near $20,000.
Hacks, scammers and fraud remain key concerns. But there are
bright spots. In a research report earlier this month, Anthony
Pompliano, a founding partner at asset-management firm Morgan Creek
Digital, said bitcoin was acting as a hedge against global
instability, citing how bitcoin moved differently to most other
asset classes.
SFOX, an institutional crypto prime dealer, found that there was
"a near perfect negative correlation" between the S&P 500 and
bitcoin in May after China announced plans to raise tariffs on $60
billion of U.S. goods.
"This is the core argument for why institutional investors
should have exposure to the cryptocurrency," Mr. Pompliano
said.
Write to Steven Russolillo at steven.russolillo@wsj.com
(END) Dow Jones Newswires
June 17, 2019 09:48 ET (13:48 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.