Bitcoin jumps 1,000% in a year; call it the new ‘Tulip Mania’, say analysts
Having seen a 10-fold jump in one year, popular cryptocurrency, Bitcoin remains volatile – it continues to make the headlines and be a favorite for many. But the trends in Bitcoin mania have appeared a little confusing since Wednesday, with the cyptocurrency plunging nearly 20 per cent in less than 90 minutes – to a low of $ 9,009, within hours of crossing the $ 11,000-mark. On Thursday, again, Bitcoin was trading above the $ 10,000 mark, according to coinmarketcap.com.
The cryptocurrency’s acceptance, it would seem, continues to rise, despite investing gurus like Warren Buffet, Tidjane Thiam and Jamie Dimon earlier warning of an increasingly volatile bubble.
The world’s second-largest stock exchange Nasdaq planning to launch futures contracts for Bitcoin next year, according to media reports. It would allow investors to bet on the rise and fall of the cryptocurrency, profiting if they are correct about the direction of its future price.
But analysts do not appear convinced. “Nasdaq launching Bitcoin futures will definitely add to its credibility, but it still will not be a good investment bet, since it is not backed by any credible asset,” says G Chokkalingamm, founder & MD of Equinomics Research & Advisory.
Independent market expert Ambareesh Baliga says: “The Bitcoin bubble is like Tulip mania which will crash sooner or later, as most people investing are basically speculating and do not know the nuances of the cryptocurrency.”
“Even with Nasdaq launching futures, investing in the virtual currency is not a good idea,” he adds.
A gauge of Bitcoin’s growing popularity can be the fact that it took nearly four months to climb from $ 1,000 to a closing price of over $ 2,000, but it soared to $ 10,000 from $ 9,000 in the course of about three days. Trading volume for the cryptocurrency over the past 24 hours was a whopping $ 9.75 billion, according to CoinMarketCap.
Bloomberg quoted economist Joseph Stiglitz as saying that it was a bubble going to give a lot of people a lot of exciting times as it would ride up and then go down. “Bitcoin is successful only because of its potential for circumvention, lack of oversight. So, it seems to me it ought to be outlawed,” he added.