Bitcoin busted through the $8,000 barrier over the weekend and extended gains Monday, seemingly buoyed by continued expectations for a pickup in institutional interest as enthusiasts brushed off detractors who see a dangerous market bubble.
A single bitcoin /zigman2/quotes/31322028/realtime BTCUSD +0.52% fetched $8,255.20 in recent action, according to digital currency site CoinDesk.com, a gain of around 2.8% on the day. The digital currency is up more than 700% since the end of last year.
The cryptocurrency ended last week with a 17% gain, extending a rebound from its four-day plunge logged earlier this month. It traded briefly below $6,000 as recently as Nov. 12, retreating on the suspension of a software upgrade known as Segwit2X due to opposition by other developers. The technology change would have approximately doubled the processing capacity of the underlying network.
Analysts have credited the latest rebound in part to enthusiasm from institutional investors, including the announcement of plans for CME bitcoin futures.
In a post on its website, CME Group Inc. /zigman2/quotes/210449693/composite CME +1.50% , the world’s largest futures exchange, said it plans to launch a contract in the fourth quarter “pending all relevant regulatory review periods.” An earlier post had said trading would begin on Dec. 11. The CME didn’t immediately respond to a request for comment. Reuters reported that a CME spokeswoman said the earlier notice was posted in error.
At the consumer level, Square /zigman2/quotes/205989440/composite SQ +2.87% last week began allowing what it called a “small number” of users Square Cash, its mobile money-transfer service, buy bitcoin directly from its smartphone app.
Fevered trading in bitcoin and other digital currencies has sparked warnings of a potential bubble. Yale economics professor and Nobel Prize winner Robert Shiller, who wrote “Irrational Exuberance,” a best-selling book on market manias, told Quartz in September that bitcoin was the “best example right now” of a market bubble.
Meanwhile, several Wall Street heavyweights have also sounded bubble warnings. J.P. Morgan Chase & Co. Chief Executive Jamie Dimon earlier this year compared bitcoin to the tulip mania of the 17th century, describing the cryptocurency as “a fraud.”
Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, said in September that cryptocurrencies like bitcoin meet his firm’s criteria for a market bubble.