Bitcoin this morning broke through the psychological $10,000 barrier for the first time as its price touched $10,379 during the Asia trading session. After the cryptocurrency surged to $9000 from $8000 in just seven days last week, as the current week began with the market’s eyes on $10,000. A surge in new accounts being opened on cryptocurrency exchanges as individuals investing online frantically looked to avoid missing out on price rises has been apparent. Coinbase, the largest cryptocurrency exchange in the USA, saw 100,000 new accounts opened between last Wednesday and Friday alone.
There has been interest around how Bitcoin would react to hitting the $10,000 level, with 30% and 20% corrections resulting immediately after previous resistance levels at $2500 and $5000 were hit earlier this year. However, the mainstream media coverage over the past few weeks appears to have led to a large volume of private individuals investing online in Bitcoin as a ‘moonshot’ investment. Most new buyers are buying fractions of Bitcoin worth up to a few hundred dollars. However, with Bitcoin still at a relatively low base in terms of mainstream adoption, this has been more than enough to send its value into ‘hockey stick’ mode.
So far there is no sign that passing the $10,000 level is going to lead to the same kind of correction as was the case at other ‘round number’ staging posts. $8000 to $9000 took 7 days and $9000 to $10,000 took 2 days. Into the first couple of hours of the European trading session, Bitcoin is surging towards $11,000, at over $10,700 by 09:30 in London. While it is still possible the price could drop back, the pace that Bitcoin is now moving towards adding another $1000 to its value suggests that won’t be right now. The question is now becoming at what point will the frantic pace of the current rise slow.
Bitcoin has been around since 2009 and up until this year was gaining traction slowly. The cryptocurrency started 2017 at around $1000. It’s now up around 1300% for the year, a bull rally that is entirely unique in modern financial markets. As a wider asset class, cryptocurrencies have seen close to 2,200% growth this year, with Bitcoin accounting for approximately 54% of their total market value.
Some believe that what we are currently witnessing is the start of a new financial market worth potentially trillions of dollars. Others believe that the fact that the legendary ‘tulip’ bubble of the 17th Century is the only real precedent to what is currently happening to cryptocurrencies is an obvious warning. Most think that something in between is most likely.
However, even the biggest cryptocurrency fans reticently admit that the recent rampage up in price probably indicates a bubble and a correction will take hold at some point. The question is really whether that correction represents 20% or 50% and a return to a slower climb back up, or a crash to next to no value.