Bitcoin price smashes the $11,000 mark

 
Courtney Goldsmith
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Bitcoin has hit one milestone after another this year (Source: Getty)

Bitcoin's rapid rise in value has continued today as the cryptocurrency broke not only the key $10,000 barrier on major exchanges but also surpassed $11,000.

Bitcoin had soared 13.88 per cent, or more than $1,300, to $11,283.82 at the time of writing, according to Coindesk's aggregate index.

The notoriously volatile digital currency crashed to below $6,000 just this month. Its critics have labelled it a bubble, and many investors are still too wary to invest.

However, announcements like CME's decision to launch bitcoin futures by the end of the year are raising awareness by bringing the fringe asset into the mainstream.

Reports have also emerged today that Nasdaq plans to launch a bitcoin futures contract in 2018.

Bitcoin bull and UK managing director at eToro, Iqbal Gandham, said the new milestone was driven by confidence that bitcoin will become a commonly used currency.

"Everyone from central banks, hedge funds, governments, big incumbent financial institutions and retailers are looking at use cases for cryptocurrencies. This trend isn’t going to slow down any time soon," he said.

A bitcoin bubble?

While he admitted bitcoin is "going through its volatile teenage years", Gandham denied it was a bubble.

“The reality is that emerging technologies carrying radically new ideas will always see swings in their value before their potential is fully realised and the price stabilises. The difference here is that the technology in question – the blockchain – means all this volatility happens in public," Gandham said.

Neil Wilson, senior market analyst at ETX Capital, was less optimistic.

“There are no fundamentals or technicals that explain this other than it being a massive speculative bubble," Wilson said.

"It’s hard to say precisely where we are in the curve, but the shape of the chart is parabolic and this sort of thing never, ever lasts."

There could be more gains to be made before the bubble pops, however. "Whilst this appears like a classic bubble, bitcoin could have a lot, lot further to run before it blows," he said.

Naeem Aslam, chief market analyst at Think Markets UK predicted bitcoin prices could reach $14,000 by the end of next year, if not by mid-year.

Aslam added: "Of course, the question everyone is asking is if and when there will be a pullback. The 10K mark does have the potential where we see some investors choosing to cash in some of their profit for the year.

"Setting investors aside, gains and moves like these keep central bankers awake, as bitcoin poses a clear threat for central banks who control and regulate currencies. The function of the central bank is to maintain price stability and keep inflation in check. Without central banks, price stability and inflation does become an issue and this would be something which needs to addressed."

Not a threat to the global economy

Meanwhile, Bank of England deputy governor Jon Cunliffe said bitcoin was too small to pose a risk to the global economy as it hit the $10,000 threshold.

“This is not a currency in the accepted sense. There’s no central bank that stands behind it. For me it’s much more like a commodity," he said.

“This is not at a size where it’s a macroeconomic risk to the global economy, but when prices are moving like that, my view would be investors need to do their homework,” Cunliffe told the BBC.

Read more: Bitcoin breaks key $10,000 mark on some exchanges

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