Cryptocurrency passes US$10k as fears rise
Bitcoin has surpassed US$10,000 ($14,505) for the first time, bringing this year’s price surge to more than 10-fold even as warnings multiply that the largest digital currency is an asset bubble.
The euphoria is bringing to the mainstream what was once considered the providence of computer developers, futurists and libertarians seeking to create an alternative to central bankcontrolled monetary systems. While the volume of transactions in cryptocurrencies is relatively small, the optimism surrounding the technology is driving it to new highs.
Bitcoin has risen by more than 50 per cent since October alone, taking off after developers agreed to cancel a technology update that threatened to split the digital currency. Even as analysts disagree on whether the largest cryptocurrency by market capitalisation is truly an asset, its US$167 billion value already exceeds that of about 95 per cent of the S&P 500 Index members.
“This is a bubble and there is a lot of froth. This is going to be the biggest bubble of our lifetimes,” said hedge fund manager Mike Novogratz said at a cryptocurrency conference in New York.
Novogratz, who said he began investing in bitcoin when it was at US$90, is starting a US$500 million fund because of the potential for the technology to eventually transform financial markets.
There is no agreed authority for the price of bitcoin, and quotes can vary significantly across exchanges. “A sustained move above US$10,000 will indicate people’s faith that further appreciations is expected,” Swissquote Bank head of market strategy Peter Rosenstreich said before the benchmark was reached. “Otherwise we should see significant profit-taking and decline as people sell.”
The total market cap of digital currencies sits north of US$300b, according to coinmarketcap.com’s website. — Bloomberg