News Bitcoin breaks $10,000 barrier - this is why digital...

Bitcoin breaks $10,000 barrier – this is why digital currency is spiking

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Meteoric rise or a financial bubble? Whatever the case, the value of one Bitcoin held steady at more than $10,000 (£7,460) on Wednesday (29 November), leaving many experts asking why – and if it could last.

Less than a year ago, the online currency was trading at below $1,000 per coin but has since spiked in value despite pressure from financial giants and the closure of exchanges in key markets.

Bitcoin, like other major forms of cryptocurrency such as Litecoin and Ether, remains highly volatile.

Its value rises and dips on a daily basis and in many cases, hype breeds hype. Here, speculation matters.

One factor in recent value spikes, an expert told IBTimes UK, was the announcement by a US derivatives operator called CME Group that it was planning to launch Bitcoin futures contracts later this year.

Essentially, these will provide investors with safer options to short Bitcoin while reducing volatility.

“It’s the apprehension of futures trading as well as news begetting news and driving more hype,” Charles Hayter, the CEO of market analysis platform CryptoCompare, said.

“Typically Bitcoin struggles to overtake significant round numbers as we have seen at $3,000, $5,000 and $7,500. $10,000 is likely to be the same. However, the CME futures as well as prospects of exchange traded funds (ETFs) will no doubt continue to stimulate demand.

“The risk of something moving up so quickly is that it comes down to earth with a bump. That could leave regulation with a bad taste in its mouth.”

Just the beginning

While speculation remains rife, other experts have suggested Bitcoin was only getting started. “This really is just the beginning,” said Iqbal Gandham, director of a trading platform called eToro.

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

He added: “This new milestone is driven by increasing confidence that the cryptocurrency will become a commonly used exchange of value. But here’s the thing: when we reach the point of using Bitcoin in an everyday way, the price of an individual Bitcoin will be higher than $10,000.

“We’ll be spending and saving small fractions of a single Bitcoin.

“While the price volatility in bitcoin leads some commentators to assume we’re in a Bitcoin 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.”

According to CryptoCompare, the total market capitalisation of Bitcoin is over $177.5bn.

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