Bitcoin crossed the long-awaited $10,000 threshold yesterday and shows no sign of slowing down. A remarkable November for the digital currency has seen new historic prices reached every few days. Prices are rising faster than anyone had expected and now the only question on everyone’s mind is, just how high is it going to go?
As we said yesterday, $10,000 had been widely expected, though in the end it took most of the day to get there. Now we are past that barrier things are moving quickly again with the market already eyeing $11,000. Bitcoin traded over $12,000 in South Korea this morning but investors there are paying a premium of around 12%, so strong is demand relative to local supply. At the time of writing, average prices on American exchanges are in the $10,900 range.
The increased interest from institutional investors seems to have driven 2017’s upward trend in the price of Bitcoin. As the sector matures the negative associations of cryptocurrencies, that they are somehow shady, are falling away. Next month will see the Chicago Mercantile Exchange’s introduction of Bitcoin futures contracts, further marking Bitcoin’s journey to respectability. Futures contracts allow both speculation and “hedging”, a means to mitigate trading risk, and are seen as key to increasing the involvement of big financial firms.
If the long term trend seems to be based on growing institutional acceptance, analysts are identifying the recent spectacular peaks as driven by the fear of missing out (FOMO) on something special. These price rises are correlated with new Coinbase accounts, more Google searches and increased media coverage. IG analyst Chris Weston wrote to his clients:
Bitcoin has seen another frenzy of buying as the fear of missing out trade bites even harder.
How far can it go? No one knows. For every advisor warning of a bubble there’s another saying this is just the beginning. One thing everyone can agree on: the future might be exciting, but it’s not going to be smooth.
Image From Shutterstock