Bitcoin crosses through $17,000 as concerns mount
Bitcoin briefly crossed through the $17,000 (£12,615) mark in volatile Asian trading, extending its record breaking run.
The cryptocurrency has soared around 70% this week according to Coindesk.com, despite fresh warnings of a dangerous bubble.
Its dramatic rise has been likened to a “charging train with no brakes”.
As concerns mount, an industry group has warned plans to start bitcoin futures trading were “rushed through”.
Critics have said Bitcoin is going through a bubble similar to the dotcom boom, whereas others say it is rising in price because it is crossing into the financial mainstream.
“Bitcoin now seems like a charging train with no brakes,” said Shane Chanel, from Sydney-based ASR Wealth Advisers.
The surging price of Bitcoin has been helped by the upcoming start of the futures market this weekend.
Bitcoin futures will launch on the Chicago-based Cboe Futures Exchange on Sunday. The world’s largest futures exchange CME will begin its bitcoin offering a week later.
But the Futures Industry Association, which includes Wall Street’s largest banks, brokers and traders, has written to the US regulator over concerns that the contracts were approved “without properly weighing the risks”.
“A more thorough and considered process would have allowed for a robust public discussion among clearing member firms, exchanges and clearing houses,” the association said.
While Goldman Sachs is a member of the association, it is also one of the banks that will work as an intermediary to help clear bitcoin futures contracts for some of its clients.
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A spokeswoman for the investment bank said it was evaluating the risks as part of its due diligence process.
Many big investors have been reluctant to pile into the cryptocurrency market unless it is regulated.
But the prospect of a bitcoin futures market has raised hopes amongst bitcoin enthusiasts that it will be regarded as sufficiently “regulated”.
While bitcoin has become more mainstream in recent weeks, many observers warn the bitcoin market could be a bubble waiting to pop.
“Bitcoin remains a major gamble as it is very much an asset that remains in uncharted waters, we’ve simply not experienced this before,” said Nigel Green, founder and chief executive of deVere Group.
“An asset that goes almost vertically up should typically raise alarm bells for investors,” he added.
But even if there is a crash or a major correction, some analysts have said it is unlikely to pose risks to the global economy.
While billions of dollars have been invested in bitcoin, its $268bn total market value is still relatively small compared to other asset classes.
Source by BBC