Yesterday, we reported that bitcoin’s price had risen by $3,000 in less than a week. Today, it has appreciated by the same amount in less than 24 hours.
At 15:13 UTC, bitcoin's price was $16,070.20, an increase of 24% in the last 24 hours, according to Coinmarketcap.com. The cryptocurrency crossed $15,000 at 13:48 UTC today on Coindesk's index. It had crossed that mark earlier on other indexes.
Bitcoin’s wild rally is a contrast to the price movements of other cryptocurrencies. Eight of the world's top 10 most-traded cryptocurrencies slid downward in price. Even IOTA and Monero, which had registered double-digit gains in recent days, declined.
But those declines didn’t stop the overall market valuation for cryptocurrencies from pushing past the $400 billion mark. At 15:17 UTC, the cryptocurrency market was worth $419.2 billion.
The market valuation for cryptocurrencies has imitated bitcoin in its price trajectory. Passing the $400 billion took less than two weeks, the amount of time that it took for the market to traverse the distance between $100 billion to $200 billion. It took more than four years for the cryptocurrency to reach $100 billion. (See also: This Bitcoin "Bull Market" Is Nothing.)
Is Bitcoin Dante’s Inferno?
Howard Davies, chairman of the Royal Bank of Scotland, seems to think bitcoin is akin to Dante's inferno.
In a Bloomberg interview, Davies called bitcoin’s price rise a “frothy investment bubble” and “irrational exuberance.” According to him, CME and CBOE, which are set to introduce bitcoin futures trading in the coming weeks, haven’t ascertained enough feedback from market participants about margin levels and trading limits. (See also: CME To Launch Bitcoin Futures.)
“All the authorities can do is put the sign from Dante’s Inferno - 'Abandon hope all ye who enter here,'” Davies said. “That’s what’s needed, and it needs to be done by the Federal Reserve, the SEC, and the Bank of England and the European Central Bank at the same time.”
Davies might have a point. The latest surge in bitcoin’s price is often attributed to enthusiasm about the introduction of futures trading for the cryptocurrency. But that optimism has no rational basis, given that bitcoin has yet to prove its promise as a currency for daily use or as a store of value. The underlying exchanges, which will provide a reference price for bitcoin, work in unregulated markets and are beset by security problems.
This morning, NiceHash, a Slovenia-based mining marketplace for people willing to let their computers be used for mining, said hackers had stolen bitcoin worth $64 million from its systems. The company called the attack “highly professional” with “sophisticated social engineering” and said it was still being investigated. (See also: What Are The Safest Ways To Store Bitcoin?)
For those still looking to invest in bitcoin, there is some good news. Yann Quelenn, market strategist with Swissquote (an exchange that launched Switzerland's first bitcoin futures product), has forecast a price target of $20,000 by the end of December for bitcoin. But that climb is not necessarily predicated on optimism about the digital currency’s future prospects.
Quelenn said “sheer greed” would be responsible for the surge. The introduction of futures trading at CME and CBOE is cause for “an impending stampede” of institutional investors, eager to profit off the cryptocurrency’s volatility. “Just watch the fireworks,” he said.