Bitcoin heads towards $10,000 despite continued 'bubble' warnings
By Oliver Haill
Date: Monday 27 Nov 2017
(ShareCast News) - Bitcoin skyrocketed above the $9,700 mark on Monday, with analysts and speculators eyeing the $10,000 mark as the cryptocurrency's seemingly inexorable rise continues.
Bitcoin, which broke through $2,000 in May and $4,000 in August and has gained more than 850% in 2017 so far, had traded in a range for much of last week but barged higher in the post-Thanksgiving weekend.
With the decision by CME to launch bitcoin futures in December giving bitcoin an extra veneer of respectability, the cryptocurrency has been bought up more than 50% since the decision was announced at the end of October, with the Coinbase bitwallet provider adding 100,000 accounts in a 48-hour period last week around Thanksgiving.
Topping $300bn, Bitcoin's market cap has climbed above those of IBM, Disney and McDonald's, though one of the flaws of the cryptocurrency was highlighted by a report released that estimated that the energy use of bitcoin's network, which verifies all transactions made using the currency, of 30.1 terawatt hours a year is more than the national consumption of several European countries.
But the cryptocurrency's exchange rate was the main focus of attention on Monday.
"It looks like it will hit $10k, it's only a matter of time now," said analyst Neil Wilson at ETX Capital, who said the CME move provided legitimacy for Bitcoin as a tradeable asset.
"We're seeing strong flows with leveraged traders almost entirely long. While we shouldn't put too much truck in round numbers, the performance has been mesmerising and it is a sign of sky-high demand."
He noted that the cryptocurrency appeared "overbought" based on normal technical indicators, "but not exceptionally so", with resistance being tested but broken at the $9,700 level.
IS A CORRECTION COMING?
"However, bulls should be wary there is not a lot of support all the way down to $8k," Wilson said.
Once speculation is over, it is very likely that only the real business model projects will remain, such as logistics companies, accountancy or statistics firms reliant on blockchain.
Although few would bet against the $10,000 hurdle being cleared given recent momentum, a correction is inevitable, said Nicholas Gregory, CEO of cryptocurrency enabler CommerceBlock.
"Real proponents of cryptocurrency aren't interested in bitcoin's price. Widespread adoption is the big prize and too much hype only puts ordinary people off.
"Bitcoin passing the $9,000 mark will spark more talk of a crash. However, it's important to remember that a correction is certain sooner or later. A bubble popping and a viable longer term future are not mutually exclusive. We've seen this with the dotcom bubble."
Analysts at FXPro said that with the market anticipating that Bitcoin will reach $10,000 "there is a huge risk that big players start taking profit, with news provoking panic and sell-off".
But those at XTB said the CME joining the fray could attract a surge of institutional interest, "then the rise seen so far, which has been largely driven by retail traders, could be just the beginning".
BITCOIN CORRECTION IS NEEDED
Gregory said a correction is "essential" for bitcoin for it to avoid forever becoming "detached from the world of fundamentals that would render it useless longer term".
"Coinbase adding 100,000 accounts in a 48-hour period last week around Thanksgiving shows bitcoin hasn't just captured the public's imagination but its wallet, too," he said. "It's a development that symbolises the shift we've been hoping for, namely the widespread adoption of bitcoin by people and business that could ultimately see it replace pounds, pence, dollars and cents."
For traditionalists, it is hard to fathom, said Wilson. "Rather than a commodity or currency, Bitcoin is like owning stock in a company that will only ever issue 21 million shares and never pay a penny in dividends. The only way it has value is if the next guy is willing to pay you more for it - the greater fool. With no intrinsic value to Bitcoin, it's hard to see this as anything other than a giant speculative bubble."
Wall Street bosses have been queuing up to call Bitcoin's bluff this year, with the likes of JPMorgan chief Jamie Dimon predicting that the cryptocurrency will experience a devastating crash.
Morgan Stanley CEO James Gorman said investors who think Bitcoin is a stable investment are "deluding themselves".
Gorman said: "Something that goes up 700% in a year - it's by definition speculative," he said. "So anybody who thinks they're buying something that it's a stable investment is deluding themselves. It might go up another 700%, but it could easily not."
Analyst Naeem Aslam at Think Markets said that although a lot of noise and headlines are made by Bitcoin this year, however, he pointed out that Ether, another cryptocurrency coin, holds the best performance of the year with a gain of more than 5,500%.
Special promo:
Trading the Forex Market? Visit FXmania.com to get advanced infomation about currencies and the Foreign Exchange
Market.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN