Bitcoin prices could test another eye-watering barrier again Wednesday, just hours after breaking through the $10,000 mark for the first time, as the value of the world's benchmark cryptocurrency tops some of the most well-know companies in U.S. history.
Bitcoins were marked $1050, or 10.7% higher in London trading on the bitsmap exchange and changing hands at $10,925 each after having hit a record $10,930.6 each earlier in the session, only hours after topping $10,000 and two days after breaching $9,000. The jump extends its year-to-date advance past 950% and means the digital currency now trades at 8.3 times the price of gold, after having traded $200 below the bullion on January 1.
The moves also put bitcoin's "market cap", the theoretical value based on 16.7 million coins that have been verified by blockchain miners, at $186.5 billion, a figure that would place it 14th in the ranking of valuations on the Dow Jones Industrial Average, ahead of Walt Disney Co. (DIS) - Get Report ($156 billion), IBM (IBM) - Get Report ($141 billion) McDonald's Corp. (MCD) - Get Report ($149 billion) and just below Verizon Communications (VZ) - Get Report ($199 billion).
Collectively, however, cryptocurrency market cap values have exceeded $320 billion, based on Wednesday prices, and could hit $2 trillion by the end of next year, according to Galaxy Investment Partners founder Mike Novogratz, who first predicted bitcoin's $10,000 potential earlier this year.
"I have a sense that this is going to go a lot further. When I try to think of valuation, bitcoin really has taken the use case of digital gold," he said Monday on CNBC's FastMoney program. ""If gold's $8 trillion, I'm wondering why bitcoin can't get there."
The meteoric rise of bitcoin and its digital currency cousins, however, has raised concern from some who worry about the destablizing impact on broader financial markets, especially given their transition onto mainstream platforms such as the CME Group Inc., which plans to launch a bitcoin futures contract before the end of the year.
That list of sceptics includes TheStreet's founder, Jim Cramer, who explained last week how cyber criminals can hack into corporate systems and extort owners and investors once they're inside.
"When they do get in, they want money," Cramer wrote last week. "But they only accept, for the most part, Bitcoin for their ransom -- and people pay it. They pay it all over the world. At the same time, there are failing regimes all over the place, from Venezuela to Zimbabwe and, some would say, Brazil. The rich people there know to buy Bitcoin."
"So you have this currency that is bid up to $8000 by those anxious to get money out without detection or be paid without detection," Cramer asked. "You mean to tell me that's not a bubble? You think that's a safe place, a reasonable approximation of value?"
However, Bank of England Deputy Governor Jon Cunliffe told BBC Radio4 Wednesday that the cryptocurrency world wasn't yet large enough to unsettle financial market stability or the broader global economy, although he did note that investors "kind of need to do their homework" when entering into transactions at these elevated levels.
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