This week has been nothing short of amazing for Bitcoin investors. In just one week, Bitcoin prices saw an 83%, increase smashing through the $15,000 milestone, and eagerly heading towards the $20,000. As of press time the prices are set at $18,275 by coinmarketcap.
Bitcoin continues on defying both gravity and rationality, and on keeping investors on the edge of their seats, amidst more warnings of a profiling disaster.
More than just a flash in the pan, Bitcoin is an extraordinary phenomenon, as mysterious as who really his creator is in the first place.
Reasons behind the wild surge
It looks like last week’s announcement about Cboe Futures Exchange and CME Group launching Bitcoin future contracts by December,10 and December 18, had a major impact on Bitcoin prices. Besides, with Nasdaq finalizing its plan to introduce Bitcoin starting 2018, the news came to push it further, towards another all-time high.
On the other hand, the self-replicating viral process, and the exponentially growing market, brought in millions of new individuals into exchanges. Following the learning process curve of an average trader, Bitcoin prices skyrocketed. It took advantage of both the enthusiasm of beginners and the faith of early adopters. With a solid market capitalization of $283.070 billion, representing 65.8% of the combined market cap of all digital currencies, the king of cryptocurrencies is consolidating his throne. And taking over his contenders’ market shares as shown by the chart hereafter.
Market share distribution evolution, among major cryptocurrencies until December 7th, 2017. Source: coinmarketcap
Same warnings, no trend change
Numerous trusted figures and senior analysts from the financial world, from Nouriel Roubini, and the head of Goldman Sachs, all the way to JP Morgan Chase’s CEO and Nobel-prize-winning economist Joseph Stiglitz had all warned about the digital currencies’ ecosystems. They went as far as arguing that such market should be outlawed. The news reported by CNBC, that digital currencies combined market cap, is now worth more than JP Morgan Chase itself, is rather astonishing.
As a matter of fact, with a $430 billion market cap, the digital currencies’ combined market value, is 18% higher than JP Morgan Chase’s ($364.24 billion) as of press time.
Digital currencies combined market cap evolution over the last year. Source: coinmarketcap
Bitcoin’s phenomenal raises and irrational volatility are adding more unanswered questions about the future of the asset. Furthermore, the bubble concern is raising more red flags about the extent of its burst. Interviewed by Bloomberg on December 6th, Royal Bank of Scotland Chairman Howard John Davies joined his voice to detractors, while asked about the market structure causing Bitcoin to be highly appealing to investors.
After letting out a long sigh of despair, he said:
“Well, I am afraid, this is irrational exuberance. […] Even in the biggest rises, you have got some people trading in and out. We are in a very unusual territory […] and am not sure that normal rational market analysis can really illuminate this very well”.
A closer look
With little inherent value underlying the asset, Fortune Magazine reported how many analysts fear that introducing Bitcoin futures could cause a wider crash should the bubble burst. Entering Wall Street stock exchanges will bring Bitcoin out of its digital world. It has long been its cradle, where it emerged and blossomed. The cryptocurrency will be put to test against well established and deep-rooted assets. Whether would Bitcoin rise to the challenge or crumble under the weight of heated competition, is a question that only time can answer.
That being said, it is unclear what the future holds for Bitcoin and its prices evolution. Speculations certainly hint at big things to happen. The circle of life taught us that with every rise, fall should follow, and Bitcoin might not be an exception in this regard. The real question here is, how steep will be the slope of the next price correction.
The “Final judgment”
From Dante inferno to Jesus the savior, it looks like Bitcoin’s course of evolution took a magnitude that went beyond reasonable scientific explanations. It polarized the general opinion to a point that faith and spirituality got in the way of rationality. Whether it’s the “Mark of the beast” or “Jonah’s great fish”, we are witnessing an interesting page of history, that will either way end in irreversible consequences.