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Growing institutional interest in cryptocurrencies behind bitcoin price jump

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The price of bitcoin jumped to a near six-month high of $5,714 on Friday driven mostly by growing institutional investment in cryptocurrencies and blockchain.

The Wall Street Journal had on Thursday disclosed that Facebook was in talks with dozens of financial firms and e-commerce companies to support cryptocurrency payments project. The Facebook cryptocurrency which is underpinned by blockchain technology and pegged to the US dollar will enable Facebook-owned WhatsApp users to transfer money to one another. Mark Zuckerberg had during the FB Developer Conference noted his excitement on going into the payment sector.

Facebook is not the only organisation investing in cryptocurrencies. PayPal has also kick-off its significant investing in blockchain technology. It recently participated in a funding round for Cambridge Blockchain, a digital identity software provider that combines blockchain with an off-chain personal data service to validate the identity of parties, legal entities and devices, according to a press release. US financial institutions JP Morgan and Goldman Sachs are also known to be investing in different levels of blockchain project developments.

Fidelity Investments, in a new research said the trend was likely to increase over the next five years. The firm’s research which surveyed over 441 US institutional investors, including pensions, hedge funds, financial advisors, and endowments to determine their outlook on investing in cryptocurrencies found that institutional interest in bitcoin and cryptocurrencies were on the increase.

“Venture investment in the sector continues at a healthy pace, complemented by an increasing number of security token offerings (STOs), and the global regulatory environment remains cautiously constructive,” says Tom Jessop, president of Fidelity Digital Assets, the firm’s crypto unit. “Another indication of a growing ecosystem around digital assets is high transaction activity on the Bitcoin blockchain. Institutions are more aware of these developments now than they were six or twelve months ago, which is a positive sign for continued interest and adoption.”

Price of bitcoin and other cryptocurrencies have reacted positively to the renewed interest and investment. Bitcoin rose by 5.9 per cent the most it has seen since November 18, 2018. Over all it has seen a 55 per cent jump in 2019 also helping to pull rival tokens higher. Ethereum is up 26 per cent and Litecoin rose more two-fold according to the Bloomberg composite pricing.

Analysts at Coindesk are confident bitcoin is on its way to test the psychological resistance of $6,000 soon.

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