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Bitcoin’s wild run is winning more attention from Wall Street

Workers look over racks of Bitcoin data miners.
Workers look over racks of Bitcoin data miners in Virginia Beach, Va.
(Steve Helber / Associated Press)

Signs of a widening embrace across the financial services industry sent Bitcoin to new heights, with the cryptocurrency closing in on $50,000 for the first time.

A week after Tesla announced its $1.5-billion investment in Bitcoin, the digital asset keeps making inroads into traditional finance. The latest is news that an investment unit of Morgan Stanley is considering whether to bet on Bitcoin.

And there’s evidence that more companies are beginning to add services for cryptocurrencies — an asset class that is still lightly regulated and controversial among policymakers. On Thursday, BNY Mellon said it has formed a team that’s developing a custody and administration platform for traditional and digital assets. Mastercard International Inc. has also said it will begin allowing cardholders to transact in certain cryptocurrencies on its network.

The combination of luminaries, such as Tesla’s Elon Musk, and powerhouse banks is adding ammunition to Bitcoin’s meteoric gains. In February alone, prices are up some 40% and were last hovering near $48,000.

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Tesla is making a $1.5-billion investment in the cryptocurrency bitcoin. That’s more than Tesla has spent on R&D in any of the last three years.

“The key for Bitcoin’s path higher is to win over more corporate endorsements,” said Edward Moya, senior market analyst at Oanda Corp. “Bitcoin is no stranger to massive weekend moves, and the next several days could easily see some wild swings.”

There remains a fierce debate over whether Bitcoin is a legitimate asset with real purpose or value. The token has been derided for its role in money laundering and scams. Recently Nassim Nicholas Taleb, statistician and author of “The Black Swan,” said he’s getting rid of his Bitcoin. A currency is never supposed to be more volatile than what you buy and sell with it, Taleb said on Twitter, adding that you can’t price goods in the cryptocurrency: “In that respect, it’s a failure (at least for now).”

Even so, the price trend is still straight up, and Bitcoin stands as another example of the speculative excess that is defining this bull market, along with penny stocks and cannabis companies.

There are hints that more Wall Street heavyweights could dip into the crypto market. In an interview with CNBC, Daniel Pinto, co-president and chief operating officer of JPMorgan Chase & Co., said client demand isn’t there yet for Bitcoin, but he’s certain that’ll change.

Bloomberg reported Sunday that Counterpoint Global, a unit of Morgan Stanley Investment Management, is exploring whether the cryptocurrency would be a suitable option for its investors, according to people with knowledge of the matter. Moving ahead with investments would require approval by the firm and regulators.

“With each major announcement like the one BNY Mellon made, other institutions are spurred to more rapid adoption and deployment of digital assets,” Patrick Campos, chief strategy officer at Securrency, a developer of blockchain-based financial and regulatory technology, said Friday. “Tesla’s recent announcement will embolden other large corporates and institutions to accept crypto as not just a worthy asset class, but perhaps even an essential one.”


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