Technology

Bitcoin peaks above $5,000 for first time

Bitcoin price graph Image copyright EPA
Image caption Bitcoin was able to stay above $5,000 for only a brief amount of time

Bitcoin has crossed the $5,000 (£3,862) threshold for the first time.

The virtual currency peaked at $5,103.91 in the early hours of Saturday, according to CoinDesk's price index.

The record high helped push the total value of publicly traded crypto-currencies - including Ethereum and the Bitcoin-offshoot Bitcoin Cash - to more than $176bn.

However, there has since been a sell-off.

At time of writing, Bitcoin was 12% off its peak, at $4,485.

Sell orders

At the start of the year, one bitcoin traded for less than $1,000, and as recently as July some market watchers feared that the currency could crash lower as a result of a mooted "civil war" over its future.

However, since then, its value has been boosted, after most of its developers and miners - those who authorise transactions by contributing computing power - began implementing a compromise plan to let the technology handle more transactions per minute.

In addition, August's "fork" of the underlying blockchain - the ledger of past Bitcoin transfers - created the new virtual currency Bitcoin Cash without causing major disruption to the original asset.

Both events attracted media attention, which has been linked to Bitcoin's subsequent climb.

Despite the current fallback, one expert said he expected Bitcoin to continue to rise over the medium term.

"We've seen drops like this happen before when a particular number is hit - often because people have placed orders with exchanges to exit a currency when it reaches a certain value," said Eitan Jankelewitz, a specialist in crypto-currencies at the London-based law firm Sheridans.

"And it's human nature to pick a round number [like $5,000].

"But traditional investors are starting to view having crypto-currency as a small part of their diversified portfolios as an acceptable way to add risk.

"Plus, there are more companies that are making it easy to buy Bitcoin at scale without having to understand how the technology works or how to keep it safe."

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