Bitcoin has hit $10,000 ahead of the end of year prediction for the first time. The cryptocurrency arguably began its meteoric rise in October when it hit $5,000, in a few short months it has doubled in value. 2017 might be just the year of the Bitcoin.
The news broke early Tuesday morning when the digital currency traded at $10,009 on the South-Korea based CEX exchange before dropping back down to its current place at $9967.
As the currency speeds upward, the concerns regarding an impending bubble loom evermore. The fears are founded in the almost too quick rise of a decentralized currency, but despite the risks, investors continue to buy into the digital means of trade in case they are missing out on a major cash cow. This is evident on the World Coin Index which shows the volume of Bitcoin transactions has not grown at a similar pace to Bitcoin’s value; this suggests that many of the buyers are basing their purchase on its value rather than using it to buy actual goods or services.
With CME about to enter the Bitcoin realm, once cautious investors could give the digital coin a try. The group’s contracts will be settled in cash, which means that investors would not receive Bitcoin at a lower (or higher) rate but rather the difference in price in dollars, according to Sky News.
Sebastian Purcell, an assistant professor at SUNY Cortland in New York, believes that the upcoming futures “spells the end of the Bitcoin mania.”
"These capital flows from institutions will temper volatility. This will make Bitcoin undesirable for traders since volatility is critical for a good trading vehicle. These points mean that the gold-rush is over, but perhaps they also mean that Bitcoin could finally serve as a digital currency." Mr. Purcell said in a market outlook piece written for Seeking Alpha as reported by Sky News.
Crypto mania has reached an all-time high, and so have talks of a bitcoin bubble putting a swift end to it all. Similar to the dot-com bubble of 1999-2000 which saw a period of extreme growth in the usage and adaptation of the internet by both businesses and consumers. During that time, many inter-based companies referred to colloquially as dot-coms were founded and when the bubble burst, many failed.
The rise of Bitcoin has resulted in a similar enthusiasm, in fact, bitcoins are four times more expensive than dot-com stocks were at their height.
“People are buying Bitcoin because they expect other people to buy it from them at a higher price; the definition of the greater fool theory,” writes Buttonwood in an excerpt from Buttonwood’s notebook in The Economist.
The possibility that investors will begin selling now that the currency has hit $10,000 is strong but time will tell.
Andre says he loves wrestling and bitcoin. pic.twitter.com/po3GH6gXxE— Michael Novogratz (@novogratz) October 25, 2017
Bitcoin supporter, the billionaire fund manager Michael Novogratz who originally thought Bitcoin would be at $10,000 by the end of this year now thinks it could hit $40,000 by the end of next year.
"What's different about these coins than other commodities, there is no supply response here. So it's a speculator's dream in that as buying happens there's no new supply response that comes up. So every price move gets exaggerated. It's going to get exaggerated on the way up. There will be 50 percent corrections. It will get exaggerated on the way down,” he told CNBC’s Fast Money.