The virtual currency bitcoin hit a new high of $9,700 on Monday — making it worth seven times more than an ounce of gold.
After starting the year with a value of just $1,000, the currency’s value has skyrocketed 860 percent this year. Its value was listed at $8,000 just last week.
The latest gains could be fueled by expectations of big investors, such as hedge funds and asset managers, pouring money into the currency.
Even a small investment “would make a dramatic impact on the bitcoin market,” Thomas Glucksmann, head of marketing at Hong Kong bitcoin exchange Gatecoin, said.
Beginning next month, the cryptocurrency will gain even more legitimacy in the financial industry as investors will be able to trade bitcoin futures via the Chicago Mercantile Exchange — which, according to Glucksmann, will encourage big investors “to dip their toes into the bitcoin market.”
“The legitimacy this gives bitcoin as a tradeable asset is very important,” Neil Wilson, senior market analyst at ETX Capital, said. “The market cap of bitcoin now exceeds that of IBM, Disney or McDonald’s.”
Warnings still loom for potential bitcoin buyers, however, as its price has also been volatile at times. It plunged to beneath $4,000 in September.
The currency, which has not been adopted by any government, emerged in the aftermath of the financial crisis. Bank and financial institutions warn of associations with money laundering and online crime that may have plagued bitcoin early on.
JPMorgan Chase CEO Jaime Dimon has called bitcoin a “fraud” that would “eventually blow up” — but some financial advisers have lauded the cryptocurrency.
Hussein Sayed, chief market strategist at online foreign exchange broker FXTM, said bitcoin is showing no signs of slowing down — and adviser Shane Chanel, of ASR Wealth Advisers, predicts the value could reach $12,000 in the next few months.
“Given that number of users haven’t exceeded 0.1 percent of the global population, there’s still more potential for this momentum trade to continue,” Sayed said.
“Whether the price will be justified in the foreseeable future, depends on the adoption and the application of the new currency, but so far it still looks unstoppable.”
By Sara Shayanian