BITCOIN, BOOM OR BUBBLE?
Bitcoin’s vertiginous ascent showed no signs of stopping on Monday, with the cryptocurrency soaring to another record high just a few per cent away from $10,000 after gaining more than a fifth in value over the past three days. Central bankers say the success of bitcoin and other cryptocurrencies is just a bubble.
new york — Bitcoin is showing no signs of slowing down, blowing past $9,500 a week after topping $8,000 and approaching its closest ever to five figures.
The price of the largest cryptocurrency by market value is soaring as it gains greater mainstream attention despite warnings of a bubble in what not everyone agrees is an asset. From Wall Street executives to venture capitalists, observers have been weighing in, with some more sceptical than others. Bitcoin has risen about 45 per cent over the past two weeks. By comparison, it took the S&P 500 Index since February 2014 to achieve a similar increase.
“The weekend’s Bitcoin price hike is just the continuation of a long-term bull run on the cryptocurrency, fuelled by the tsunami of speculative trading on Japanese exchanges and the entrance of institutional investors across the world,” said Thomas Glucksmann, Hong Kong-based head of marketing at cryptocurrency exchange Gatecoin Ltd.
“It is more likely that the $10,000 psychological stratosphere will push more institutional investors into the mix.”
The surge has swept along individual investors. The number of accounts at Coinbase, one of the largest platforms for trading Bitcoin and rival Ethereum, has almost tripled to 13 million in the past year, according to Bespoke Investment Group.
Bitcoin reached an intraday record high of $9,747.49 on Monday, and was at $9,350.33 as of 9.40am in London, up 13 per cent from Friday. The rapid appreciation has made it difficult for bullish analysts and investors to keep their predictions up to date.
Hedge fund manager Mike Novogratz, who is starting a $500 million fund to invest in cryptocurrencies, said last week that Bitcoin would end the year at $10,000. A day later, Fundstrat head of research Thomas Lee doubled his price target to $11,500 by the middle of 2018.
In a move toward mainstream investing, CME Group has said it plans to start offering futures contracts for Bitcoin, which could begin trading in December. JPMorgan Chase & Co, the largest US bank, was weighing last week whether to help clients bet on Bitcoin via the proposed futures contracts, according to a person with knowledge of the situation.
Bitcoin’s surge in value is forcing Wall Street banks to balance clients’ interest in speculating on the cryptocurrency with executives’ scepticism about its future. JPMorgan Chase & Co CEO Jamie Dimon has been one of Bitcoin’s most prominent detractors, calling it a fraud and deriding buyers as “stupid”, while his finance chief, Marianne Lake, has struck a more measured tone. The firm is “open minded” to the potential uses for digital currencies so long as they are properly regulated, she said last month.
The total market cap of digital currencies now sits north of $300 billion, according to data on Coinmarketcap.com’s website.
$300B is the current total market cap of digital currencies