Bitcoin Jumps to 5-Month High to More Than $55,000

Bitcoin jumped to a five-month high above $55,000 on Wednesday, extending its rally from the previous trading, as stock markets tumbles in October.

According to Coin Metrics, the cryptocurrency last traded 6% higher at $54,270, while ether also rose about 3% to $3,576.

Bitcoin rose to $55,499 earlier in the session, to rise 13% this week alone and 87% in 2021.

The rally comes after Gary Gensler, Chairman of the Securities and Exchange Commission said in a hearing of the House Financial Services Committee that he has no plans to ban cryptocurrencies. Federal Reserve Chair Jerome Powell also said on Friday that he has no plans to ban the e-currency.

Investors are also waiting for the Securities and Exchange Commission (SEC) to approve a bitcoin futures ETF this month.

"Bitcoin hasn't proven to be a safe-haven asset - its price has fallen along with the stock market several times before - but many still see it as such and it has been holding up amid Wednesday's stock market turmoil," CNBC wrote.  At the same time, stocks were falling on investor fears about higher prices, rising inflation, the reopening situation and debt limit.

“Janet Yellen discussion on the air yesterday was a major reason to buy bitcoin. the value of the dollar does not seem to be worth the value of the cryptocurrency.”

Yellen warned on Tuesday that inflationary pressures hitting the US economy could last for several months and that the US should expect a recession if the debt limit is not raised within two weeks.

“So far, we've seen cryptocurrencies behave as a hybrid somewhere between a commodity and a currency of stock. Volatility has been 4 times that of stocks," said Lisa Chalet, chief investment officer at Morgan Stanley Wealth Management.