itcoin rebounded above $50,000 today as the cryptocurrency staged a dramatic recovery following a price crash three months ago.
The world’s largest cryptocurrency by overall value jumped over 4% during the past 24 hours to reach overnight highs of about $50,440 (£37,040), its highest level since May 15.
The latest price surge came after Paypal said it will allow British users to buy, hold and sell Bitcoin and other cryptocurrencies including Ethereum and Litecoin starting later this week. Paypal introduced the feature in the US last year and the UK is the second market globally where it has been launched.
Bitcoin has gained over 71% in value since the start of 2021, although it remains below a record high of close to $65,000 (£47,741) hit in April.
Other digital coins including Cardano and Tether have also gained ground in a broad-based rally over recent days.
The value of Bitcoin and other digital coins fell sharply in June and July, dipping below $30,000 at one point. The slump was driven by a regulatory crackdown in China, which is developing its own national digital currency controlled by the country’s central bank.
The value of the world’s total cryptocurrency market has swelled by almost $1 trillion over the past month to about $2.2 trillion, prompting warnings from Britain’s Financial Conduct Authority that investors in crypto assets face significant risks and must be prepared to lose all of their money.
More asset managers are seeking to gain more exposure to the cryptocurrency market. At least four asset managers have recently filed with the US Securities and Exchange Commission (SEC) for ETFs that invest in Bitcoin futures after SEC Chair Gary Gensler recently signalled a willingness to approve such funds.
Paypal has rejected criticism of its plans and has said it will introduce “educational” content on its app to help inform and protect crypto investors.
Nigel Green, chief executive and founder of deVere Group, said: “I remain confident that Bitcoin will hit, or even surpass, its mid-April all-time high of $65,000 by the end of 2021.”
The executive is among the world’s most persistent crypto bulls. Last month he claimed “crypto is the inevitable future.”
The price of Bitcoin stood at about $11,500 a year ago.
Laith Khalaf, head of investment analysis at AJ Bell, said: “The ability to trade cryptocurrencies is nothing new, but the significance of PayPal’s entry into the UK market is its potential to process crypto transactions between consumers and businesses.
“This isn’t a service which will be offered at outset in the UK, but it’s already up and running in the US, where PayPal’s crypto ventures only began last October, so we can expect pretty rapid development on this side of the pond too.
“Of course, there’s still the issue of consumer and business demand to transact in crypto. What’s more it’s questionable how many businesses that do accept crypto will want to hold onto it after the transaction has taken place, rendering such a transactional facility little more than a sales gimmick.
“Crypto is clearly hugely volatile, and while businesses have bills to pay in dollars, pounds and euros, they’re unlikely to want to store lots of crypto on their balance sheet, lest prices take one of their habitual nosedives.
“While many are no doubt using crypto as a bit of harmless fun with small amounts of money they can afford to lose, some consumers are at risk of getting sucked in and spat out by the crypto craze.
“Within the crypto market itself, PayPal’s presence is positive in that it is a high profile, publicly listed company which is already subject to regulatory scrutiny. But overall the crypto craze remains a worry for consumer advocates and regulators, as well as inveterate luddites.”