Bitcoin is on its way to being worth $10,000 per coin. Currently, the cryptocurrency is up 800% compared to the beginning of the year, when it was priced at $968 per coin. As of this evening, the price was a few hundred dollars shy of $10,000.
Why is bitcoin rising?
As buzz around cryptocurrencies continues to increase, more and more companies are talking about the technology. Some organizations are even adopting it.
Square is one such case. The payments processing company now allows customers to buy and sell bitcoin through Square Cash. Even as companies start to embrace the blockchain technology that makes bitcoin possible, BTIG analyst Mark Palmer still downgraded shares, calling the company’s stock rally “overdone.”
But rather than a growing use throughout the financial sector, it seems growing public awareness of bitcoin is what’s driving the price surge.
Bitcoin is “officially an investor mania,” according to Josh Brown from Ritholtz Wealth Management.
Factors like the anticipation of the CME listing cryptocurrency futures in the second week of December and investor FOMO (fear of missing out), are driving “another frenzy of buying,” said Chris Weston, chief marketing strategist at IG Group, in a note to clients Monday.
Is it too late to buy bitcoin?
Apparently, this is what many were asking friends and family around Thanksgiving tables over the holiday weekend. And lots of people seem to have decided that no, it’s not too late.
More than 100,000 people opened new Coinbase accounts between November 22 and November 24, which means there are now more Coinbase users than Charles Schwab accounts. The total number of accounts on the platform is now around 13.1 million. But there’s an important detail to point out in the Coinbase and Charles Schwab comparison: The cryptocurrency trading accounts are worth much less than the $3.3 trillion total client assets in the more than 10 million open Schwab accounts.
Coinbase users have more than doubled from the 4.9 million accounts open last November, according to data from CNBC.
It may seem that everybody is investing in bitcoin, but there are a few things to consider before you buy: the cryptocurrency is extremely volatile, crypto hedge funds charge serious fees to invest your money, and the value of bitcoin is only based on the assumption that it will continue to grow and become the predominant cryptocurrency.
How high will bitcoin go?
All these new investors and “mad momentum” are driving prices higher, according to Weston. It’s not clear where the ceiling is or, for many analysts, what the higher prices really signal besides a me-too trend among investors.
The price of coins is still extremely volatile. Bitcoin has crashed, losing 80% of its value, on five different occasions over the last few years. But these severe dips often generate additional public interest in the cryptocurrency.
Paul Gambles, managing director of MBMG, said cryptocurrencies are essentially a pump and dump scam, adding that the prices of favorite coins like bitcoin and Ethereum are propped up by users pumping and dumping.