Bitcoin flirted with a $20,000 valuation before falling to $18,500 at the close of the first day of trading futures on the massive Chicago Mercantile Exchange.
The day marked another step towards acceptance as a mainstream investment in this year’s phenomenal rags to riches story of the cryptocurrency as the first Bitcoin futures came to market.
While speculators wade into Bitcoin in the hope of making a quick fortune, critics are calling the virtual payments system a possible Ponzi fraud and an investment bubble set to burst.
Bitcoin started 2017 with a value of $997 and despite some volatility on the way, has soared to nearly $20,000.
Establishment warns against Bitcoin bubble
Anyone holding 50 Bitcoin worth $49,850 on January 1, 2017, would be a Bitcoin millionaire today – with much of that profit coming since December 1, when one Bitcoin was worth $10,000.
CME’s launch of bitcoin futures was accompanied by a series of warnings. For example:
- Denmark’s central bank boss said Bitcoin was dangerous and investors shouldn’t blame regulators if they lost their money
- A Singapore financial regulator said Bitcoin had no intrinsic value
- France’s finance minister is pushing for the G20 to debate Bitcoin regulation
- Swiss bank UBS chairman Axel Weber urged regulators to take a closer look at digital currencies
- Analysts at ING warned Bitcoin would become a ‘niche product’ again
The common thread of their warnings is Bitcoin is not a wealth store or a generator of money, and the real value comes from the blockchain software that runs the Bitcoin payment system.
Impossible to say if price is to high
“We are enthusiastic about blockchain technology, and the current attention for Bitcoin could boost blockchain and digital currencies’ development,” said ING.
“But as we have argued, we doubt whether Bitcoin itself has what it takes to become a serious mainstream payment systems contender. Instead, we think it is more likely for Bitcoin to return to its roots as a niche payment system.
“A niche asset adopted worldwide could still have a substantial user base and hence value. It is therefore impossible to say whether the current Bitcoin market price is too high for a niche asset.”