Bitcoin rose to a six-week high on Tuesday on positive headlines that included the possible entry of major financial institutions into the space, lifting sentiment on the overall cryptocurrency market.
The virtual currency gained after a brutal 50 percent loss in the first quarter of the year, following a nearly 1,400 percent surge in 2017.
On Tuesday, bitcoin climbed in six of the last seven sessions. It was last up 4.4 percent at $9,340.88 on the Bitstamp platform.
Bitcoin’s gains also increased demand for other cryptocurrencies such as ripple and ethereum, pushing the market capitalization of all digital currencies to $427 billion, according to cryptocurrency tracker coinmarketcap.com. That is the largest market cap since early March.
“The space has remained relatively stable over the past several weeks and crypto markets are reacting with resilience as people start to gain a more nuanced understanding of the long-term potential of blockchain technology,” said Rob Viglione, co-founder of ZenCash, a coin that promises privacy for borderless, decentralized communications and transactions.
Blockchain, a digital ledger of transactions, underpins cryptocurrencies in general and can be used to track, record, and transfer assets across all industries.
News that major financial institutions are becoming more bullish about the space has also bolstered the confidence of retail investors, Viglione added.
Numerous media outlets reported that Goldman Sachs enlisted Justin Schmidt, a former trader, to be the first head of digital asset markets in the company’s securities division. Reports also said Barclays PLC has been gauging interest from its clients about launching a cryptocurrency trading desk.
Reuters also reported on Tuesday that one in five financial institutions is considering trading cryptocurrencies within the next 12 months, according to a survey published by Thomson Reuters.
Among those respondents who said they were willing to trade cryptocurrencies like bitcoin, 70 percent said they were planning to start trading in the next three to six months, the survey showed.
“I think the public catching wind of news that Goldman Sachs and other financial powerhouses are not just showing interest but pro-actively hiring and investing in the crypto markets is instilling a positive sentiment across the board,” said Josh McIver, chief executive officer of ULedger, a blockchain technology company.
A total of $28 billion has changed hands over the last 24 hours, the largest trading volume since Feb. 10, analysts said.
That said, market participants pointed out that challenges in the cryptocurrency space such as increased regulatory focus are not going away any time soon and may take a long time to resolve.