Bitcoin crossed the $10,000 milestone on Tuesday night, so far defying expectations from financial experts that the cryptocurrency would crash.
Bitcoin, a form of crypto and digital currency, has seen its value bounce from $1,000 per bitcoin in the beginning of the year to $10,000 for one bitcoin on Tuesday.
The value of all purchased bitcoins in existence is close to $167 billion, according to BBC.
But should you believe in the bitcoin hype? Experts worry about a market drop. Bitcoin is nearing $11,000, despite increased warnings that the currency is trapped in a bubble, Bloomberg reported.
“This is going to be the biggest bubble of our lifetimes,” hedge fund manager Mike Novogratz said on Tuesday, according to Bloomberg.
Novogratz, who invested in bitcoin when it cost $90, said he has started a $500 million fund because of the currency’s ability to transform the market.
Experts worry that bitcoin will soon be regulated, which could drop its value, too.
“It’s extremely difficult to determine a fair value for bitcoin,” said Craig Erlam, senior market analyst in London at Oanda, to Bloomberg. “And there’s no news of substance on the regulatory front.”
And bitcoin has shown “roller coaster behavior,” according to Quartz. For example, stocks during the 2008 financial crisis dropped 40 percent. Bitcoin sees double-digit drops all the time. That’s one reason Wall Street has been cautious to embrace it.
However, some experts believe the asset will continue to grow. CNBC's Jim Cramer said in June digital currency could help ward off cyberattacks.
"I think it could because the European banks are frantically trying to buy them so they can pay off ransomware. It's a short-term way to be able to deal with cybersecurity. It is the way to pay off the bad guys," Cramer said on "Squawk on the Street."
Though markets are cautious to fully embrace it, Wall Street strategist Tom Lee told CNBCthis week that bitcoin could be a new form of “gold” for the younger generation.
In fact, a young couple from Provo said in 2013 that they planned to document their first 90 days as a married couple living on the virtual currency. They planned to use bitcoin to purchase "furniture, rent, groceries, travel, gas, restaurants and even medical expenses," according to the Deseret News.
Bitcoin offers digital trust, which is sitting well with those who worry about institutional banking.
The cryptocurrency was introduced on the internet in 2009. Bitcoins are kept in an online wallet. There's no card or cash that represents bitcoin. All exchanges are done through the internet.
As ABC News reported, bitcoin was created as an alternative to modern currency. "Transactions allow anonymity, which has made it popular with people who want to keep their financial activity, and their identities, private."
In a way, bitcoin has become more of a replacement for gold, Lee told CNBC.
"It's valued as if it is a small company today," Lee told CNBC. "We think over the next 10 years, this new generation of millennials are going to view trust as a replacement for gold. So, bitcoin is essentially digital gold for another generation."
Lee said earlier this year he expects bitcoin to be valued at $11,500 in 2018.
via heraldtimes
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