Bitcoin entered uncharted territory on Wednesday after breaching US$10 000 for the first time, leaving investors to wonder how long the rally will go — and whether it will end in tears.
The digital currency climbed as much as 4.4% to a record $10 379.53 during Asia trading hours, capping a more than 10-fold increase this year. Its market value has surpassed $176bn, according to Coinmarketap.com.
Here’s what bitcoin watchers are saying about the dizzying rally.Arthur Hayes at BitMEX
“They said it was a bubble at $1 000, they said it was a bubble at $5 000 and they said it was a bubble at $10 000,” said Hayes, CEO and co-founder of Hong Kong-based BitMEX, a cryptocurrency derivatives venue. “Shorting anything is a very dangerous game, especially if you’re shorting into a transformational monetary system. These transformational experiences happen once every few hundred years and are extremely chaotic.”
Hayes, who was speaking on the phone from New York after attending the Consensus: Invest cryptocurrency conference, said he saw more people wearing suits than jeans and hoodies — a sign of growing interest on Wall Street.
“The fear of missing out is becoming stronger and stronger,” he said. “The traditional asset manager or investor, banker who has probably poo-pooed bitcoin the past few years is now paying upwards of thousands of dollars to hear about how they can get involved in this new industry.”
Hayes said bitcoin may reach $50 000 by the end of 2018.Stephen Innes at Oanda
“I’d be a little bit worried on a falling knife scenario,” said Innes, head of trading for Asia-Pacific at Oanda in Singapore. “Are current investors prepared for this? No, of course not.”
Longer term, cryptocurrencies will gain more credibility as CME Group starts selling bitcoin futures and other mainstream institutions get involved, Innes said. For now, he sees a short-term pullback of 3-6% as investors take stock of how much they’ve gained.
“When we’re starting to get into these crazy numbers, I’m a little bit fearful that retail traders are jumping in under the false guise of this will run on forever,” he said. “We know things never go in a straight line.”Jehan Chu at Kenetic Capital
“If you look at the kind of trajectory not just of the currency and the price, but really of the mind share among influencers, among governments, among central banks, among enterprises — that’s actually where I see the real guideposts of where the price will go,” said Chu, managing partner at cryptocurrency fund Kenetic Capital in Hong Kong.
“One of the main factors is the settling down of the civil wars that have been raging on,” Chu said, referring to intense debate within the industry over technology upgrades that resulted in the formation of a rival coin called bitcoin cash. “There’s much less drama at the moment at least. One side has disarmed and that has really provided a clear path ahead to show that the ecosystem can grow in a more predictable manner.”
Chu sees some risk of a correction, but not a major one, and said that high prices will ironically [...]