Bitcoin closes in on $40,000 as bulls flood in again and ECB boss Christine Lagarde labels cryptocurrencies a 'funny business'

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The Bitcoin price rose sharply once again on Wednesday evening and Thursday morning, climbing past the $38,000 mark, as European Central Bank president Christine Lagarde labelled cryptocurrencies a "funny business".

It has been a volatile few weeks for Bitcoin, with the price hitting an all-time high of close to $42,000 last week before dropping back. The price has consistently swung around 10% a day as investors buy in and cash out of the cryptocurrency, which has surged more than 330% in a year.

Bitcoin was up sharply on Thursday morning, climbing 8.7% over a 24 hour period to $38,132 by 6.35am ET (11.35am GMT). Its smaller rival Ethereum rose 7.2% over 24 hours to $1,160.

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The dramatic rise in the price of Bitcoin and other cryptocurrencies has sharply divided market opinion, pitting much - although not all - of the financial establishment against a new breed of online investor.

On Wednesday, ECB boss Lagarde said Bitcoin needs to be regulated on a global level and linked it to "totally reprehensible money laundering".

She said Bitcoin is not a currency, as many of its proponents argue, but a "highly speculative asset which has conducted some funny business".

Bambos Tsiattalou, a financial crime lawyer at London's Stokoe Partnership Solicitors, said tighter regulation would be a major problem for cryptocurrencies.

"Many people buy Bitcoin and other cryptocurrencies because they are worried about and don't trust fiat currencies," so greater regulation would demolish much of their appeal, he said.

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Yet despite raised eyebrows from regulators and central banks, the soaring price has caused some institutional investors to buy in.

Analysts at Morgan Stanley said in a note: "With the large decline in the dollar, deeply negative real yields and continued policy uncertainty, investors have been looking for alternatives to traditional cash holdings."

They added: "Innovation in digital assets continues rapidly and will likely drive increased
institutional participation over time."

Yet the analysts cautioned that "the perception of 'value' and demand can vary materially, for example due to changing regulations".

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