Bitcoin surpassed $10,000 for the first time this week, bringing this year’s price surge to more than 10-fold and triggering warnings about a bubble.
Bitcoin surpassed $10,000 for the first time this week, bringing this year’s price surge to more than 10-fold even as warnings multiply that the largest digital currency is an asset bubble.
The euphoria is bringing to the mainstream what was once considered the providence of computer developers, futurists and libertarians seeking to create an alternative to central bank-controlled monetary systems. While the actual volume of transactions conducted in cryptocurrencies is relatively small, the optimism surrounding the technology continues to drive it to new highs.
Bitcoin has risen by more than 50 percent since October alone, taking off after developers agreed to cancel a technology update that threatened to split the digital currency. Even as analysts disagree on whether the largest cryptocurrency by market capitalization is truly an asset, its $167 billion value already exceeds that of about 95 percent of the S&P 500 Index members.
“This is a bubble and there is a lot of froth. This is going to be the biggest bubble of our lifetimes,” hedge-fund manager Mike Novogratz said at a cryptocurrency conference Tuesday in New York. Novogratz, who says he began investing in bitcoin when it was at $90, is starting a $500 million fund because of the potential for the technology to eventually transform financial markets.
The total market cap of digital currencies now sits north of $300 billion, according to data on Coinmarketcap.com’s website.