Bitcoin rocketed to a lifetime high well above $16,000 on Thursday after climbing some 67 per cent over one week, intensifying the debate about whether the cryptocurrency is in a bubble about to burst.
The largest US cryptocurrency exchange struggled to keep up with record traffic as the price surged, with an upcoming launch of the first bitcoin futures contract further fueling investor interest, reports Reuters.
Proponents say bitcoin is a good medium of exchange and a way to store value, much like a precious metal. They also argue it is preferable to traditional currencies because it is not subject to central bank manipulation.
The supply of bitcoin will eventually be capped at 21 million, and some 16.7 million have already been released.
But critics say that the price run-up is a bubble that has been driven mostly by speculation, leaving bitcoin vulnerable to a sharp reversal. JPMorgan Chase & Co Chief Executive Jamie Dimon famously called bitcoin a fraud in September.
“Bitcoin remains a major gamble as it is very much an asset that remains in uncharted waters, we’ve simply not experienced this before,” said Nigel Green, founder and chief executive of deVere Group.
“Also, an asset that goes almost vertically up should typically raise alarm bells for investors,” he added.
The world’s biggest cryptocurrency has surged seventeen-fold in value so far this year.
Bitcoin climbed as high as $16,615.62 on the Luxembourg-based Bitstamp exchange, up nearly 22 per cent on the day. It was last at $16,607.14.