Saturday, June 22, 2024

    Bitcoin Flies to $11,000: Central Banks Warn of a Bubble

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    Bitcoin steamed past the huge psychological barrier of $10,000 yesterday. Since then, it’s shown little sign of letting up. Less than 24 hours since it reached five-figures for the first time, the world’s most popular cryptocurrency continued on its rise topping out at around $11,500 on Wednesday afternoon. It has since retraced somewhat to around $11,000 at the time of writing. Of course, it wasn’t long before representatives of central banks passed comment on the historic moment of BTC reaching five-figures.

    The rise of Bitcoin throughout 2017 has been spectacular. Since January, the digital currency has delighted investors with its incredible 11x gains. In fact, without including other cryptocurrencies, Bitcoin is without doubt the hottest investment of the last twelve months. If the current trend is anything to go by, it’ll likely go down as the biggest money spinner of the entire decade too.

    Whilst the story told by the market is clearly one of immense optimism, not everyone is quite so positive. Neil Wilson, the senior market analyst at ETX Capital referred to “the madness of crowds” when referencing the dramatic rise. He went on to tell the Guardian:

    [Bitcoin’s] up more than 14% today alone and the year-to-date chart is simply staggering. There are no fundamentals or technicals that explain this other than it being a massive speculative bubble.

    Meanwhile, deputy governor of the Bank of England, Sir Jon Cunliffe, told BBC Radio 5 Live that he didn’t think of Bitcoin as a currency at all. Curiously, he based this on a lack of a central bank backing it up. He prefers to term Bitcoin a commodity. However, it’s classified, the central banker went on to say that the market capitalisation of it wasn’t sufficiently large enough to pose a risk to the global economy should it burst. Unfortunately, he didn’t comment on how much a risk cryptocurrencies in general pose those who control the global economy, however.

    Meanwhile, William Dudley of the Federal Reserve echoed Cunliffe’s sentiment. He advised caution because “it’s not a stable store of value” – quite rich coming from the president and chief executive of a central bank that outright refuses to be audited. 

    Some commentators had a less dismissive outlook for Bitcoin, however. Dennis de Jong of the online currency brokerage UFX suggested an even higher short term price of $15,000, and even hinted at greater stability in the future:

    “Until bitcoin becomes a commonly used payment source, it’s very possible that it could hit $15,000 and beyond based on its current desirability… If bitcoin falls into wider circulation, and becomes accepted into more conventional funds and exchanges, we are likely to see a normalisation of its value.”








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