Bitcoin hits new peak as bubble fears grow

Bitcoin's stratospheric rise has fuelled fears of a bubble after a 10-fold increase this year.

Bitcoin soared to fresh records on Tuesday, putting it on course for $10,000, but the virtual currency's stratospheric rise has fuelled fears of a bubble after a 10-fold increase this year.

The cryptocurrency, launched in 2009 as a bit of encrypted software written by someone using the Japanese-sounding name Satoshi Nakamoto, has had a roller-coaster ride that has taken it from just a few US cents to its current sky-high valuation.

Traded on a specialist platform, with no legal exchange rate and no central bank backing it, Bitcoin is monitored and regulated by its community of users, and is used to buy everything from pizza to a pint in a London pub.

But it has attracted widespread criticism, from financial industry titans to governments.

JP Morgan Chase boss Jamie Dimon in September slammed the unit as a "fraud" and said he would fire his employees if they were caught trading it, while China has shut down Bitcoin trading platforms and South Korea's prime minister on Tuesday voiced fears it could lead the young to get involved in fraudulent crime.

Still, the opposition has not stopped a dizzying surge in Bitcoin this year, with its value jumping from a 2017 low of $752 in mid-January to a record high above $9,895 on Tuesday afternoon. Its value has rise about 45 per cent in the past two weeks alone.

Analysts say the popularity has been driven by growing interest from major investors and a decision last month by exchange giant CME Group to launch a futures marketplace for the currency, which has not been listed on a major bourse before.

As its fortunes have improved, retail investors have also rushed to jump on to the Bitcoin bandwagon, although fears of a bubble are growing, having witnessed wild swings in the past.

"The biggest issue with Bitcoin is that with no government backing or regulation, the gains may be big - but the sell-offs can be equally as drastic," warned James Hughes, chief market analyst of Britain-based forex trader AxiTrader, in a note to clients. - AFP