Rabat - The dizzying ascent of bitcoin shows no sign of slackening this Tuesday, as the cryptocurrency has exceeded the record high of USD 10,000, having seeing its value multiplied by 10 in less than a year.
Rabat – The dizzying ascent of bitcoin shows no sign of slackening this Tuesday, as the cryptocurrency has exceeded the record high of USD 10,000, having seeing its value multiplied by 10 in less than a year.
Set at USD 10,004 around 11 a.m. this Tuesday, bitcoin has now officially broken the symbolic threshold of USD 10,000 after appreciating nearly 20 percent over the last three days.
Where to now? For billionaire hedge fund legend and former Fortress executive Mike Novogratz, bitcoin’s value will “easily reach” USD 40,000 by 2018.
For Novogratz, who predicted the cryptocurrency would break USD 10,000 before the end of 2017, a big “wave of institutional investors” is coming to the bitcoin market across the world, with several major firms like the USD 95 billion Man Group and Fidelity Investments, which manages over USD 3.2 trillion worth of assets, leading investors into the bitcoin market.
Many other investors beside Novogratz also predicted large price corrections in the far future. This week, BitGo engineer Jameson Lopp stated that major corrections could occur as bitcoin evolves into a trillion dollar market.
Lopp emphasized that even an extreme correction, such as a 50 percent decline in price, would only set back the bitcoin price by two months.
As a result of rising cryptocurrency prices, the combined market value has reached over USD 300 billion, according to CoinMarketCap, making it larger than the market capitalization of Wal-Mart, the world’s largest retailer.
By mid-October, the cryptographic currency was trading at USD 5,000. The recent surge is all the more spectacular as bitcoin started the year around USD 1,000, then stumbled shortly thereafter in one of its regular crashes.
According to data from the Monaco-based Altana Digital Currency Fund, the online digital currency exchange platform Coinbase registered 300,000 new users between Wednesday and Sunday, during the Thanksgiving weekend in the United States. The total number of users of Coinbase reached 13.3 million worldwide.
Without physical existence, Bitcoin is not governed by a central bank or a government but by a large community of Internet users and accepted in a growing number of transactions. Relying on a peer-to-peer payment system based on blockchain technology, it is traded on specific platforms on the internet and has no legal tender.
For its supporters, it offers a secure alternative to traditional currencies: the “blockchain” makes the transactions tamper-proof because, in order to modify information, it is changed simultaneously among all users.
This characteristic is of great interest to the banking sector, where the blockchain could open new horizons, simplify dematerialised transactions, and generate savings.
“Bitcoin could become a safe haven for investment professionals if the traditional monetary system collapses,” says Mikhail Mashchenko, an analyst at prominent social trading platform eToro.
“The demand for bitcoin is growing as the crypto market has become less volatile, and an increasing number of professional investors see it as insurance,” he told Russia Today.
However, the meteoric rise of cryptocurrencies has led to multiple warnings from central bankers, banking executives and institutional investors about the risks of a bubble. Even some hedge fund platforms are avoiding the cryptocurrency as they fear it may be a fad.
“Such a surge will be based on emotions, not on fundamental factors,” explain Mashechenko. “Further growth of the cryptocurrency will require something more than euphoria.”
For David Futter, a Fintechs expert at the Ashurst law firm in London, “regulators know that cryptocurrencies and blockchain can pay big dividends, but they also bear in mind the catastrophic consequences that this can have if good governance, stability and control are not preserved.”
The main competitor of bitcoin, ether (also called Ethereum), has also experienced a stratospheric flight this year, appreciating by more than 6,000 percent. This cryptocurrency, launched at the end of 2015, reached a high of just under USD 500 on Monday, for a capitalization of nearly USD 50 billion.