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Bitcoin is trading at a 13-month high on Monday amid reports that Facebook will launch its own cryptocurrency with heavyweight backing this week.
The rally coincides with reports that Facebook (FB) is set to officially launch its cryptocurrency project this week.
Crypto industry website The Block reported on Friday that Facebook will officially unveil its new cryptocurrency, Libra, on Tuesday. The website also reported that the new cryptocurrency will be backed by a roster of top international companies, ranging from payment companies like Visa, MasterCard, and PayPal, to tech businesses like Uber and Spotify and telecoms company Vodafone.
“The likeliness of Facebook's launch helping Bitcoin's price surge is due to the media attention it is likely to bring as well as potentially serving as a gateway for Facebook, WhatsApp and Instagram's massive user base to the world of digital currencies,” Joe DiPasquale, the CEO of crypto hedge fund BitBull Capital, told Yahoo Finance UK.
Facebook has long been rumoured to be working on its own cryptocurrency and has assembled a “SWAT team” in Silicon Valley to work on it, according to one industry insider.
While not directly linked to bitcoin, the imminent launch appears to be helping bitcoin sentiment. Bitcoin, the world’s biggest cryptocurrency, is often seen as a bellwether for the broader crypto sector and investors may think that Facebook’s embrace of cryptocurrency could support broader adoption of bitcoin.
“The crypto market has been seeing a virtual renaissance this year as sentiment has shifted back in favour of digital assets,” Mati Greenspan, an analyst at trading platform eToro, told Yahoo Finance UK.
“No doubt, people feel that Facebook introducing their own cryptocurrency is bullish for the space but it's only one of the many positive factors driving sentiment at the moment.”
DiPasquale said: “Facebook launching its cryptocurrency is a generally positive development in terms of increasing awareness surrounding the crypto space, but we believe Bitcoin's price appreciation is also a result of upcoming regulations and several exchanges planning to stop offering certain altcoins to US traders.”
Binance, one of the world’s biggest cryptocurrency exchanges, last week announced it will stop serving US-based customers. It comes amid increased regulatory pressure.
“With options becoming limited moving forward and centralized policies dictating market dynamics, Bitcoin is positioned to become more valuable,” DiPasquale said.
Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.