Bitcoin has received an unexpected boost from Christine Lagarde, after the head of the International Monetary Fund (IMF) detailed the global benefits of cryptocurrency.
Ms Lagarde wrote in a blogpost that cryptocurrencies like bitcoin could enable fast and inexpensive transactions, while the underlying blockchain technology could make financial markets safer.
The price of the world’s most valuable cryptocurrency returned above $8,000 following the publication of Ms Lagarde’s comments, though it is unclear if the gains are directly attributable to the news.
“Just as a few technologies that emerged from the dot-com era have transformed our lives, the crypto assets that survive could have a significant impact on how we save, invest and pay our bills,” Ms Lagarde wrote in the blogpost.
Ms Lagarde reiterated comments she made to the Bank of England last year that called for an even-handed approach to regulation, with the hope exploiting the benefits while simultaneously minimising the risks.
“Before crypto-assets can transform financial activity in a meaningful and lasting way, they must earn the confidence and support of consumers and authorities,” Ms Lagarde wrote.
“An important initial step will be to reach a consensus within the global regulatory community on the role crypto-assets should play. Because crypto-assets know no boundaries, international cooperation will be essential.”
Last month, Ms Lagarde expressed her concerns about cryptocurrencies in a separate blogpost titled: ‘Addressing the dark side of the crypto world‘.
In it, she explained the potential “peril that comes along with the promise,” due to the decentralized and semi-anonymous nature of the technology.
Such pitfalls include the financing of terrorism and new methods of money laundering, as well as facilitating the purchase of drugs and weapons over the internet.
Ms Lagarde’s latest comments come after a turbulent time for cryptocurrency markets, which saw bitcoin’s price surge by more than $1,000 in less than an hour in mid-April following months of steady decline.
The price of bitcoin experienced unprecedented gains after more than a billion dollars was traded in just one hour. (REUTERS/Benoit Tessier/ Composite)
Cryptocurrency markets are notoriously difficult to predict and analysis is often rooted in speculation, however experts believe the rocketing price may have been the result of a handful of actors.
“I personally think that the rise was due to a large institutional investor,” Olga Feldmeier, CEO of blockchain startup Smart Valor, told The Independent last week. “There are a lot of institutions, hedge funds and big investors waiting for the right to step in.”
Bitcoin has managed to sustain the unprecedented gains, with the price steadying around $8,000 in recent days. This may have been assisted by positive news in the cryptocurrency space, such as an Islamic scholar declaring the digital asset halal under Sharia Law.
The comments by Ms Lagarde are likely to add to this positive sentiment and may have triggered the market’s most recent uptick.
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