SINGAPORE: Bitcoin ploughed past US$14,000 to a fresh record on Thursday as investors continued to pile in, triggering a warning the cryptocurrency was “like a charging train with no brakes” that would inevitably slip back.
It touched a new high of US$14,475 before slipping back to US$14,328 in Asian afternoon trade, according to Bloomberg News.
The rally came just a day after the virtual currency, which has been used to buy everything from an ice cream to a pint of beer, hit the US$12,000 mark for the first time.
Bitcoin — which came into being in 2009 as a bit of encrypted software and has no central bank backing it — has risen from a 2017 low of US$752 in mid-January, and surged dramatically in the past month.
The increased interest has been driven by growing acceptance among traditional investors of an innovation once considered the preserve of computer nerds and financial experts.
US regulators last week cleared the way for Bitcoin futures to trade on major exchanges, including the world’s biggest futures centre the Chicago Mercantile Exchange (CME).
But some, including the US Federal Reserve, have warned against dabbling in Bitcoin as it could threaten financial stability, and fears of a bubble have increased as the price has soared.
“Bitcoin now seems like a charging train with no brakes,” said Shane Chanel, from Sydney-based ASR Wealth Advisers. “There is an unfathomable amount of new participants piling into the cryptocurrency market.”
But he warned: “Once the hype slows down, we will most certainly see some sort of correction.”
Chris Weston, chief market strategist at IG, also predicted “downside moves” in future.
“When the price does turn and there is confusion, even panic…. then watch the short sellers come out in droves,” he said.
Transactions happen when heavily encrypted codes are passed across a computer network.
Bitcoin and other virtual currencies use blockchain, which records transactions that are updated in real time on an online ledger and maintained by a network of computers.
But it has also suffered controversies. In 2014 major Tokyo-based Bitcoin exchange MtGox collapsed after admitting that 850,000 coins — worth around US$480 million at the time — had disappeared from its vaults.