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Bitcoin climbs as investment in crypto stays strong

Bitcoin logo appears on the display screen of a cryptocurrency ATM in Salem, Massachusetts, US. Photo: Charles Krupa/AP

Cryptocurrencies were broadly higher on Wednesday morning as investors continue to put millions of dollars in digital assets.

Bitcoin (BTC-USD) was up 1.7% to trade at $42,440 (£31,391). Ethereum (ETH-USD), the second-biggest crypto as per market cap, was also up 1% to trade at $2,924.

Naeem Aslam, chief market analyst at AvaTrade, said that last week, $50.2m was invested in bitcoin, while $95.5m entered the digital sector as a whole. Over the last six weeks, a total of $320m has entered the digital sector.

“Investors should note that money has been incoming to funds and products in the blockchain space.”

However, he said the dip in stock market indices in the US – caused by issues such as rising treasury yields, the debt ceiling faceoff between Democrats and Republicans, and the forthcoming energy crisis in Europe and China - has had a negative effect on crypto markets.

Over the last few days, bitcoin has been hovering between $40,000 and $44,000, struggling to gain enough momentum to hit a key mark of $50,000. It is no where near its all-time high of over $63,000, which it hit in April.

Bitcoin's price was up on Wednesday morning. Chart: Yahoo Finance UK
Bitcoin's price was up on Wednesday morning. Chart: Yahoo Finance UK

Cryptos have been hit by a myriad of issues, most recently a regulatory crackdown in China: last week the People's Bank of China said all cryptocurrency-related transactions were illegal.

"Many have criticised the dip last week as FUD (fear, uncertainty, and doubt) since China has already banned cryptocurrency many times before," said Jonas Luethy, sales trader at UK based digital asset broker GlobalBlock.

"This kind of news usually causes a short-term pullback in the market but doesn’t really impact the fundamentals in the mid to long run."

Watch: What is bitcoin?

Meanwhile, in the US, a Forbes report said: "It's been predicted that US Securities and Exchange Commission could greenlight a long-awaited bitcoin exchange-traded fund as soon as next month — something that could send the bitcoin price as high as $100,000."

But there is also the question of the $1tn infrastructure bill in the US that was debated earlier this year that will be put to a vote on 30 September.

"The bill, which would require tax reporting on virtually any entity related to crypto, has been heavily criticised by the crypto community and certain lawmakers amid fears the bill would stifle innovation within the space," said Luethy.

Read more: European markets rebound despite fears of global slowdown

Speaker of the US House of Representatives Nancy Pelosi is confident that the bill will pass, as the bill aims to raise $28bn in tax revenue, said Luethy.

"There has been little real opposition to the measures that will be imposed on crypto, with only a handful of senators actively opposing the bill for reasons relating to cryptocurrency," he added.

In other developments, Verifone, one of the world’s largest point-of-sale providers, has partnered with BitPay to allow US-based merchants to accept crypto payments.

Watch: What are the risks of investing in cryptocurrency?