Fears last week that Bitcoin passing the $10,000 and $11,000 price levels would result in a significant correction have turned out to be unfounded. While Bitcoin did briefly drop back to below $10,000 after passing $11,000, the upwards momentum quickly resumed. Over the weekend Bitcoin comfortably held in the high $10,000s and was on a strong upwards march on Monday and Tuesday. This morning a new burst of pace reminiscent of that which took Bitcoin past $10,000 in late November took hold during the Asian session. That momentum has held until now and Bitcoin has passed $12,500 and is heading in the direction of $13,000.
Bitcoin’s unique trajectory has split the financial world. Some mainstream financial institutions and luminaries are embracing the cryptocurrency’s rise. Spectacular gains over the past month or so, against the backdrop of a year that had already seen gains of around 800%, were kicked off by the CME futures and commodities exchange, the world’s biggest, announcing its intention to begin offering Bitcoin futures. That was followed by the likes of the Nasdaq also stating its intention to start offering Bitcoin derivatives from the first half of 2018. The CBOE exchange will launch Bitcoin futures on December 10th and CME on December 18th.
However, a large number of financial establishment names are also speaking out strongly in warning that Bitcoin’s meteoric rise is a dangerous bubble on a scale without precedent. Bitcoin’s market cap is now more than double that of Goldman Sachs.
Speaking to CNBC, Yale University senior fellow and former chief economist at Morgan Stanley Stephen Roach warned:
“This is a toxic concept for investors.This is a dangerous speculative bubble by any shadow or stretch of the imagination.”
“I’ve never seen a chart of a security where the price really has a vertical pattern to it. And bitcoin is the most vertical of any pattern I’ve ever seen in my career.”
The counter argument is that this year’s hockey stick price trajectory is the result of Bitcoin gaining the traction and momentum required to bring it into the financial markets mainstream. The hundreds of thousands of small investors that have been investing online in Bitcoin over the past several months will hope this turns out to be the case.
Whether today’s new rise prompts a subsequent correction prior to the end of the week will keep market participants’ eyes glued to Bitcoin’s price chart in the coming days.