On Thursday Bitcoin (BTC) rose above the key psychological price level of $10,000 after having plunged to a low of $6,000 a week ago. The appreciation of the virtual currency is believed to be driven by various statements from regulators which have alleviated fears that there will be a heavy-handed crackdown on digital coins. Having hit the key level analysts expect new buyers to troop into the market raising the prospect that the current price has more headroom.
“For most of December and all of January investors were focused on a regulatory crackdown, mostly in Asia. That all changed when CFTC Commissioner Giancarlo spoke at the Senate Banking Committee and changed the regulatory tone,” Brian Kelly, the head of BKCM and a CNBC contributor said.
When Bitcoin first hit the $10,000 mark in November last, leading U.S. virtual currency exchange, Coinbase, saw an increase of approximately 300,000 users around that time. These new users were credited for causing the price of the virtual currency to nearly double in the ensuing weeks.
The appreciation in price of the most popular virtual currency in the world coincides with a decision by Coinbase to disable the addition of new credit cards by customers as a method of payment in the United States. The cryptocurrency startup however revealed that debit cards would not be affected by the move.
Credit card losses
According to Coinbase the decision was driven by the fact that it was impossible to guarantee a smooth and successful experience for customers buying virtual currencies using credit cards. Some credit card firms have banned the purchase of digital coins use their products.
While the change does not currently apply to customers of Coinbase in Singapore, Australia, Canada, European Union and the United Kingdom, Coinbase is currently evaluating the situation with a view to making a decision. The ban does not also affect those who have already linked a credit card to their account on Coinbase. However their credit card issuer has to allow it in order to continue making purchases.
In the recent past some banks have announced that they will not allow their customers to buy virtual currencies using credit cards issued in their name. It is understood that banks are worried about credit card losses due to the volatile nature of cryptos.