Cryptocurrency

Bitcoin hits highest price this year, above $10,000, as Fed Chair Powell discusses cryptocurrencies

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Key Points
  • Bitcoin hit $10,489.78, the highest price it has logged since September 2019.
  • Bitcoin has seen a more than 44% increase from the start of the year and also logged its best January performance in seven years.
  • Industry participants attributed uncertainty around the coronavirus as well as recent comments by Federal Reserve Chair Jerome Powell to bitcoin's rise in the past 24 hours.
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Bitcoin hit its highest level this year and also in five months on Wednesday, jumping above $10,000 and continuing the recent bull run for the cryptocurrency.

In the early morning on Wednesday, bitcoin hit $10,489.78, the highest price it has logged since September, according to data from Coindesk. That's a more than 44% increase from the start of the year. It comes after bitcoin logged its best January performance in seven years.

Industry participants have attributed a number of factors to the rise of bitcoin, including some investors viewing the cryptocurrency as a sort of safe-haven asset in times of uncertainty.

"External factors contributing to the rise above $10K include global uncertainty around the Coronavirus outbreak," Vijay Ayyar, head of business development at cryptocurrency exchange Luno, told CNBC by email.

The new coronavirus, which originated in Wuhan, China, has claimed the lives of over a thousand people with the number of cases reported in excess of 44,000. Businesses were shut for longer than usual during the recent Lunar New Year holiday with some employees only just returning to work. Economists have raised concerns about the potential negative effect on the global economy.

Ayyar also pointed to recent comments by Federal Reserve Chair Jerome Powell, that seemed to acknowledge the potential power of digital currencies, as another factor behind the surge in the last 24 hours.

In his testimony in front of Congress on Tuesday, Powell was asked about central bank digital currencies and the Fed's view on a digital dollar. He acknowledged that Facebook's Libra project was a "wake-up call" that a digital currency could come "fairly quickly" and in a way that is "quite widespread and systemically important." But he said that there are still "many questions that need to be answered around digital currency for the United States."

Libra has faced backlash from politicians and regulators around the world concerned that a private company with over 2 billion users could issue a currency. A number of Facebook's partners have also dropped out of the project.

There have been growing calls for the U.S. to issue a digital dollar particularly as China has acknowledged that it's working on a digital yuan.

Meanwhile, the bitcoin community is also looking forward to an event which as been dubbed the "halvening" which is taking place in May. It is a change written into bitcoin's underlying code. This is when rewards for so-called miners, which are key parts of the bitcoin network, are halved. The effect is to essentially reduce the supply of the cryptocurrency coming onto the market. Previous "halvening" events have preceded price rises in bitcoin.