Bitcoin may be the wonderkid of the financial markets this year, with the price of the cryptocurrency, once dismissed as something reserved for the geeks, cryptography enthusiasts and the darknet, skyrocketing to unprecedented levels, alternating with several nosedives.
The digital currency world has dubbed it the face of the future and it is exactly such hubris that is making the bubble warnings from observers in the traditional finance grow louder each passing day.
While Bitcoin did return to the limelight in 2016 after a lull, it is only this year that it grabbed the entire world’s attention as its price soared and there were some measures of acceptance into the mainstream asset market. A clone of the currency, named bitcoin cash, also emerged in August this year.
The price of Bitcoin has surged nearly 20-fold, or over 1,900 percent, this year, from under $900 at the start of the year to a record high of almost $20,000 around December 17.
Amid repeated calls for caution, the price of Bitcoin plummeted nearly 15 percent on December 22 to below $13,000, just days after futures trading in the cryptocurrency began. And it is such wild swings that are raising the crash warnings.
Chicago exchanges CME Group and CBOE Global Markets launched futures trading in Bitcoin in December. The NYSE filed an application with the Securities and Exchange Commission on December 20 to list two exchange-traded funds, or ETFs, tracking Bitcoin futures.
Though such moves could add some legitimacy, analysts and observers are keeping their fingers crossed over the future of Bitcoin, thanks to the notorious volatility linked to the cryptocurrency. Welcoming cryptocurrencies into the mainstream could bring them under some regulatory supervision, they hope.
As the crypto-world goes gaga over the recent appreciation of Bitcoin and other crypocurrencies, voices of caution are growing. Some top bankers have called the Bitcoin boom a fraud and central banks have issued repeated warnings of an…