Bitcoin hits new record brushing aside worries of potential bubble
Leading virtual currency bitcoin blasted to another all-time high above $18,400 on Saturday. Traders are continuing to defy warnings of the risks of investing in the highly volatile and speculative instrument.
The cryptocurrency has gained a staggering 1,800 percent this year. This month, bitcoin has climbed more than 80 percent – on pace for the best monthly gain since December 2013.
The virtual currency has added another fifth to its value this week following the start of bitcoin futures trading on the Chicago-based Cboe last weekend. Its crosstown rival, the Chicago Mercantile Exchange (CME) Group plans to launch its own version of bitcoin futures trading on December 18, while the NASDAQ said it is getting ready for a similar launch in 2018.
“The hope is that futures signal the unlocking of institutional money into the digital arena and that there will be a rapid demand increase and ratification of the technology and its principles,” said the founder of industry website Cryptocompare Charles Hayter, as quoted by Reuters.
Both experienced, and newcomer investors have jumped on the bitcoin bandwagon despite numerous warnings from regulators. The latest was issued on Friday by the UK Financial Conduct Authority.
“If you want to invest in bitcoin, be prepared to lose all your money,” the agency’s chief executive Andrew Bailey told the BBC.
According to Baily, bitcoin cannot be a secure investment due to a lack of proper backing from governments and central banks and likened buying the cryptocurrency to gambling with the same level of risk.
Some analysts say bitcoin is a massive bubble that threatens the financial stability of traditional currencies and markets.
“Our evidence finds that the price of bitcoin has been artificially inflated by speculative investment, putting it in a bubble. Although bitcoin is not regulated by governments, it could still have a knock-on effect on traditional markets due to the interconnectedness of cryptocurrency markets with other financial assets,” said a report by Anglia Ruskin University, Trinity College Dublin and Dublin City University.
Bitcoin was trading at $18,482 at 13:30 GMT with its market value surpassing $300 billion, according to CoinMarketCap.
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