Bitcoin Rises Too High, Too Quickly



Bitcoin broke its all-time high again.

At the moment, Bitcoin price is supported by an inflow of investors and traders, not by users of the payment infrastructure.

Bankers and politicians are not wrong to be warning about cryptocurrencies.

People investing in Bitcoin should expect more volatility to come.

Bitcoin (COIN) (OTCQX:GBTC) prices are fluctuating wildly again. Over the course of a single month, the currency is up more than 80%. For an asset class with a market capacity of almost $88 billion, this is almost unheard of. Some media are already mentioning targets of $7500, which I do not find unrealistic given the past price fluctuations.

On the other side of the spectrum, many countries are tightening cryptocurrency regulations, or in the case of China and South Korea, the outright banning of initial coin offerings. China even went as far as shutting down its largest Bitcoin exchanges. Also, bankers and politicians are speaking up about cryptocurrency, sometimes calling it a “pyramid scheme.”

A world leader joining the party

Even Russia’s president Vladimir Putin joined the Bitcoin media party recently, calling on the Russian central bank to create a regulatory framework for the adoption and usage of cryptocurrencies with “legal guarantees for working with innovative financial instruments.” At the same time though, he warned for the risk of cryptocurrencies:

The usage of cryptocurrencies carries serious risks. I know the central bank’s position on that, we have discussed it several times with the central bank’s governor.

In another source, he also elaborated on what he sees as ‘serious risks’:

Opportunities to launder criminally obtained money, evade taxes and even finance terrorism, as well as, of course, perpetuating fraudulent schemes that obviously may affect ordinary citizens.”

This does not sound too bad, were it not that the first deputy governor of the Central Bank of Russia, Sergei Shvetsov, revealed that the Russian government would block access to cryptocurrency exchange websites to protect citizens from the volatility of these currencies.


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