Dubai: There has been no looking back for bitcoin prices despite the worries of it being a bubble even as the US bourses prepare to launch the futures contracts.
Bitcoin touched $16,000 for the first time on Thursday, extending its advance this month to almost 70 per cent as concerns mounted the cryptocurrency's rapid rise masks risks.
As of 11:15 a.m. EST, bitcoin was valued at $17,482, according to Coinbase, the largest bitcoin exchange.
Earlier, Bitcoin jumped as much as 23 percent to $16,374, before paring gains in New York trading, according to Bloomberg prices. That takes the digital currency's surge this year to more than 1,500 percent and its market capitalization to $274 billion, reported Bloomberg.
The plan to offer futures contract “is practically offering legitimacy amid the ongoing scepticism on the worth of cryptocurrencies and boosting the frenzy,” said Vijay Valecha, Chief Market Analyst at Century Financial.
The price appreciation of Bitcoins that is being seen in the markets is nothing new. Since inception, it has grown hundreds of percentage year-over-year, if not thousands. It’s just that the market capitalisation of Bitcoins was small before so it went unnoticed.”
- Harish D. Gupta | Chief Crypto Economist at Blockchain Capital Management
The Bitcoin prices have witnessed one way rally, from near $997 on January 1, resulting in a price appreciation of more than 1,400 per cent, dwarfing gains seen in other traditional asset classes.
“The price appreciation of Bitcoins that is being seen in the markets is nothing new. Since inception, it has grown hundreds of percentage year-over-year, if not thousands. It’s just that the market capitalisation of Bitcoins was small before so it went unnoticed,” Harish D. Gupta, Chief Crypto Economist at Blockchain Capital Management told Gulf News. The market capitalisation now stands at $240 billion, making it bigger than Coca-Cola, Citigroup and Oracle.
The rally in prices is seen despite some people calling it a bubble comparing it with 16th century Tulip Mania or even a dotcom bubble.
“We believe that it may or may not be a bubble, but it is certainly headed towards our price target of $200,000,” Gupta said.
A technical analyst said Bitcoin prices may extend gains going ahead.
“People were saying it as a bubble when prices were at $800. Bitcoin prices are not witnessing a major correction so far, but are declining on an intra-day basis. There is selling, but there is so much buying, which is absorbing the shock,” said an analyst who wished to be named. “Bitcoin prices may hit $25,000 by the end of first quarter.”
However, some experts feel otherwise.
“The bitcoin bubble is continuing, ahead of futures being introduced next week. These allow investors to bet against the bubble, but as bubbles are irrational that can be just as risky as betting in favour of a bubble. Abstinence is a better policy,” Paul Donovan, Global Chief Economist, UBS Wealth Management said.