While some financial experts claim the rise of the bitcoin is nothing else than a speculative bubble, the fact is that the value of the virtual currency has gone past $10,000. This makes the total value of existing bitcoins over $167bn. What should we expect next?
The milestone was hit on Tuesday, two days after bitcoin reached a valuation of $9,000, and eight days after it crossed $8,000. It is a remarkable rise, considering it was trading 6 cents seven years ago and for less than $1,000, at the start of the current year.
Years ago, a rather famous transaction involved 10,000 bitcoins in exchange for two pizzas. Now however, things radically are different. Since there has never been an asset that has risen so much in such a short time span, most industry insiders are baffled.
During its early years, the cryptocurrency garnered a lot of attention, about how it would become the new MasterCard or Western Union. However, years later it is still rather far from becoming a mainstream technology.
Still, how did bitcoin’s value suddenly increase? US-based derivatives marketplace operator CME Group’s announcement might have aided the rise. CME declared it is planning to launch bitcoin futures in December. Moreover, bitcoin serves as the reserve currency for the cryptocurrency economy, just as the dollar is the main point of reference in international trade.
The market seems to be divided. There are some who support bitcoin and consider it to be the future. For instance, former Fortress hedge fund manager, Michael Novogratz, predicted that the bitcoin could easily be at $40,000 at the end of 2018.
Additionally, more than 120 cryptofunds have launched. Some are led by highly experienced people, who formerly worked on Wall Street.
If we take a look at bitcoin’s market capitalization we can see it is less than $200 billion. Enthusiasts point out the digital currency could rise dramatically if it draws even a tiny fraction of the world’s $200 trillion in traditional financial market assets.
On the other hand, there are market watchers who remain highly critical of bitcoin. For instance, JPMorgan Chase CEO, Jamie Dimon, called bitcoin a fraud. Those who share his opinion believe that the rapid rise in value of the cryptocurrency is not sustainable and expect its value to decrease suddenly, sometime in the future.
We do not know if bitcoin’s increase is sustainable or not. If we check the cryptocurrencies market, we can see bitcoin’s rise has not been a unique event. There are other cryptocurrencies, that now worth much more than before. For instance, one Ethereum now values $480, but at the start of 2017 each one was worth only about $10.
We believe this is only the beginning for cryptocurrencies. Still, we advise everyone interested in the market to do their homework first. Learn as much as you can first, to increase your chances of success. Good luck!