Bitcoin has hit a record high after passing $9,000 (£6,700) and is close to reaching five figures as investors in the crypto currency shrug off warnings of a bubble. As bit coin’s market capitalization 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. Keeping their expectations true, Bitcoin rose to an all-time high of $9,721 on Monday. It saw a massive, sudden spike just after it broke through a closely watched milestone Tuesday night. The crypto currency traded at an all-time high of $11,155.20 at around 9:00 a.m. ET (On Tuesday Nov 28, 2017.
Bitcoin is a virtual currency that emerged in the aftermath of the financial crisis. Banks and other financial institutions have been concerned about bitcoin’s early associations with money laundering and online crime, and it has not been adopted by any government. The price has been volatile. Bitcoin plunged below $3000 in mid-September after the Chinese authorities announced a crackdown. To help rein in some of that volatility, CME will not allow the trading of bitcoin futures at prices 20% above or below the settlement price from the previous day. Last Wednesday, Fundstrat’s Tom Lee raised his mid-2018 price target for bitcoin to $11,500 from $6,000. That followed a similar upgrade last Monday by Standpoint Research’s Ronnie Moas, who raised his 2018 price target for bitcoin to $14,000 from $11,000. Analysts said the decision by Chicago Mercantile Exchange to launch Bitcoin futures in December had fuelled buying. The digital currency has gained more than 50% since the CME announced its decision on 31 October. Neil Wilson, senior market analyst at ETX Capital, said: “The legitimacy this gives bitcoin as a tradable asset is very important. The market cap of bitcoin now exceeds that of IBM, Disney or McDonald’s.”
Bitcoin has risen tenfold in value so far this year, the largest gain of all asset classes, prompting sceptics to declare it a classic speculative bubble that could burst, like the dotcom boom and the US sub-prime housing crash that triggered the global financial crisis. But there are other opinions too. BNP Paribas in a report said, “A bubble does not mean that it will burst soon. It depends on a host of factors, not least the possibility of self-fulfilling expectations that the price will continue to rise and this will bring in further participants.” It is difficult to predict what will happen in an illogical market. But investors should consider all these factors before taking a decision.