Bitcoin surges above Sh1.2 million to record high on relentless demand

Bitcoin extended its eye-popping rally on Wednesday, breaking above Sh1.2 million ($12,000) to a record high despite questions about the cryptocurrency’s real value and worries about a dangerous bubble.

Bitcoin received a boost after Friday’s announcement by the main US derivatives regulator that it would allow CME Group Inc and CBOE Global Markets to list bitcoin futures contracts.

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The move opens the door to added regulation but also more mainstream adoption, as bitcoin futures and other derivatives would make it easier to trade the new asset class.

Bitcoin’s meteoric ascent of over 10-fold from below Sh100,000 ($1,000) at the start of the year has drawn regulatory scrutiny around the world.

Some high profile individuals such as Nobel Prize-winning economist Joseph Stiglitz have said the cryptocurrency should be outlawed.

“It took a long time to establish the methodology and the way bitcoin was traded. The original appeal came from the fact they were unregulated. However it’s clearly moved out of those shadows and into center stage,” said Mick McCarthy, CMC Markets’ chief market strategist in Sydney.

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“We are in the throes of a bubble market, and one of the characteristics of a bubble market is that there is no way to know when the bubble will burst.”

The current craze for bitcoin, and cryptocurrencies in general, have been likened by some to the 17th century Dutch tulip mania and more recently the dotcom bubble.

Bitcoin was last up 4.48 percent at about Sh1,200,000 ($12,200.40) on the Luxembourg-based Bitstamp exchange BTC=BTSP after surging to the record peak of around Sh1,276,000 ($12,276.00).

“There is a lot of money flowing into bitcoin right now, mostly motivated by ”fear of missing out“ and greed,” said Leonhard Weese, president of the Bitcoin Association of Hong Kong.