The bitcoin surged to a two-year high amid expectations that the supply of the digital currency could shrink next month. The crypto-currency rallied to $720.77 on Monday, the highest since February 2014 and was trading at $692.83 as of 2:20 p.m. in New York, up 20 percent from Friday. The price of the bitcoin has recovered most of its losses following a steep decline to less than $200 in January of last year from more than $1,000 in December 2013.
According to Jack C. Liu, chief strategy officer at OKCoin in Hong Kong, the bitcoin’s validity was boosted by the increased attention from venture capitalists and banks on blockchain, the technology of digital ledgers and the price jump can be attributed to the decrease in the amount of bitcoin mining that is due to take place in July, a process that was part of the original code.
"The halving of the supply of bitcoin is attracting many retail investors," Liu said. "More broadly, we continue to see follow-through from the blockchain hype cycle translating to interest in bitcoin the asset."
Yuan Weakens
While the bitcoin is seeing a recovery, the yuan continues to weaken, falling the most in two months on Monday in Shanghai. Losses have picked up speed in recent weeks as the dollar strengthened and China’s economic outlook deteriorated. Monday’s data showed industrial output rose 6 percent in May from a year earlier, while fixed-asset investment increased 9.6 percent in the first five months of 2016, missing all 38 economist forecasts.
The yuan is trading near the five-year low it touched in January, while the Shanghai Composite Index is this year’s worst performer among 93 global stock measures. Goldman Sachs Group Inc. warned this month that the yuan weakness may trigger capital outflows and increase bets on a one-off devaluation.