Bitcoin, the cryptocurrency, has broken through an important psychological barrier as one Bitcoin (BTC) is now trading above $200.
(Source: Bitcoin Charts)
While most are saying this is a bubble, you might ask why commentators aren't putting their money on the line and shorting the currency? Our reporter Yogesh Chandarana explains:
From a legal point of view, Bitcoin isn’t actually a currency yet – it is a digital commodity. Bitcoin transactions are not settled on the CLS (Continuous Linked Settlement system) – a system that is essential to forex transactions. Because of this, it means that a trader will be taking on a lot of counterparty risk by trading in Bitcoins (will the transactions ever be settled)?
If you can look past that, and are prepared to take on additional counterparty risks to trade Bitcoin, you should look at volume levels. By the standards of other currencies, they are extremely low. This means that Bitcoin price movements will be subject to a lot more volatility. Some also question whether the Bitcoin has enough liquidity to be a serious tradable currency.
IG has a more interesting prospect:
Bitcoin bubble...?You decide.IG launch a binary on where it will be at the end of May: twitter.com/DavidJones_IG/…— David Jones (@DavidJones_IG) April 8, 2013