Bitcoin surged past US$16,000 for the first time on Thursday, spiking more than US$3,000 within a span of 24 hours, as investors continued to place frenzied speculative bets on the cryptocurrency.
The digital currency topped out at US$16,777.08 after starting the day at US$13,363.25, according to Bloomberg pricing that is a composite of exchanges. That takes its rally this year past 1,500 percent.
The latest surge came as new bitcoin derivatives products are slated to begin trading this month and are expected to boost mainstream demand.
“This is irrational exuberance,” Royal Bank of Scotland Chairman Howard John Davies told Bloomberg TV. “This is a very, very unusual market, that shows we’re not in a normal two-way trading market.”
Investors flocking to open new accounts or place orders Thursday left Coinbase, the largest US exchange, warning of outages and slow transactions.
Coinbase added at least 300,000 users since just before the Thanksgiving holiday. The company had 13.3 million users as of Nov. 26, up from 13 million on Nov. 22 and 10.6 million two months ago.
Cboe Global Markets has said it will start trading bitcoin futures on Dec. 10, while CME Group’s contracts are set to debut on Dec. 18. Nasdaq is said to be planning to offer futures in 2018.
ASX, the main exchange operator for equities and derivatives in Australia, on Thursday said it will start using blockchain, the technology that underlies bitcoin, to process equity transactions.
The digital currency also got a boost from a successful test of a technology that will attempt to ease congestion in purchases of the digital currency.
In related news, Reuters reports that Goldman Sachs is planning to clear bitcoin futures for some clients as the new contracts go live on exchanges in the coming days.
The bank is “evaluating the specifications and risk attributes for the bitcoin futures contracts as part of our standard due diligence process,” a spokeswoman was quoted as saying.
Proponents say bitcoin is a good medium of exchange and a way to store value, much like a precious metal. They also argue it is preferable to traditional currencies because it is not subject to central bank manipulation.
The supply of bitcoin will eventually be capped at 21 million, and some 16.7 million have already been released.
But critics say that the price run-up is a bubble that has been driven mostly by speculation, leaving bitcoin vulnerable to a sharp reversal, Reuters noted.
JPMorgan Chase CEO Jamie Dimon famously called bitcoin a fraud in September.
“Bitcoin remains a major gamble as it is very much an asset that remains in uncharted waters, we’ve simply not experienced this before,” Nigel Green, founder and chief executive of deVere Group, told Reuters.
“Also, an asset that goes almost vertically up should typically raise alarm bells for investors,” he added.
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