Bitcoin price extended its eye-popping rally on Wednesday, breaking above $12,000 to a record high despite questions about the cryptocurrency's real value and worries about a dangerous bubble. Bitcoin received a boost after Friday's announcement by the main U.S. derivatives regulator that it would allow CME Group Inc and CBOE Global Markets to list bitcoin futures contracts. The move opens the door to added regulation but also more mainstream adoption, as bitcoin futures and other derivatives would make it easier to trade the new asset class.
Bitcoin's meteoric ascent of over 10-fold from below $1,000 at the start of the year has drawn regulatory scrutiny around the world. Some high profile individuals such as Nobel Prize-winning economist Joseph Stiglitz have said the cryptocurrency should be outlawed.
"It took a long time to establish the methodology and the way bitcoin was traded. The original appeal came from the fact they were unregulated. However it's clearly moved out of those shadows and into centre stage," said Mick McCarthy, CMC Markets' chief market strategist in Sydney. "We are in the throes of a bubble market, and one of the characteristics of a bubble market is that there is no way to know when the bubble will burst."
The current craze for bitcoin, and cryptocurrencies in general, have been likened by some to the 17th century Dutch tulip mania and more recently the dotcom bubble. Bitcoin was last up 4.48 percent at $12,200.40 on the Luxembourg-based Bitstamp exchange after surging to the record peak of $12,276.00.
"There is a lot of money flowing into bitcoin right now, mostly motivated by "fear of missing out" and greed," said Leonhard Weese, president of the Bitcoin Association of Hong Kong.
Five things that you should know about bitcoins: world's most popular cryptocurrency
1. Bitcoin has been breaking its records in quick succession one after the other. No sooner is a record is made than it is broken. The earlier thresholds of $10,000 and $ 11,000 have been breached in less than a week each.
2. The Reserve Bank of India (RBI) on Tuesday reiterated its concern of the future of bitcoins and uncertainty surrounding it. The RBI said it wanted to reinforce its previous message to "users, holders and traders of Virtual Currencies (VCs) including Bitcoins regarding the potential economic, financial, operational, legal, customer protection and security related risks associated in dealing with such VCs."
3. A few days ago, soon after the virtual currency had hit the ceiling of $11,000, Finance Minister Arun Jaitley clarified that India doesn't consider the bitcoin 'as a legal currency as of now'. Bitcoin's meteoric ascent of over 10-fold from below $1,000 at the start of the year has drawn regulatory scrutiny around the world. Some high profile individuals such as Nobel Prize-winning economist Joseph Stiglitz have said the cryptocurrency should be outlawed.
4. The currency has reported more than 900% rise this year, the most for any asset class, and not only for any currency.
5. Bitcoin took 834 days to top $1,000 from the time that BitStamp started to track the price in August 2011. It was another 1,270 days to hit $2,000 on May 20, 2017. However, the price has surged in the later half of 2017, crossing successive $1,000 milestones with ever increasing speed on its march toward $10,000 .
With inputs from Reuters