The price of the cryptocurrency bitcoin smashed through $11,000 on Wednesday — less than 12 hours after bursting through the $10,000 mark.
Hitting almost $11,400 per coin, the digital currency has now gained about 1,000% year-to-date. But if some analysts are to be believed, ten times is "easily" on the cards.
Chris Becker, economist and Blockchain lead at Investec Bank, said on Wednesday that while the cryptocurrency may have "gotten ahead of itself" right now, "the price projection I have pencilled in is $100,000. I know, it sounds nuts."
Bitcoin’s rise in 2017, according to the Guardian, has been the largest of any asset class. But, drawing comparisons between previous rallies the cryptocrrency has enjoyed, the price is only up about 5,000% since it hit a low in January 2015. Previous rallies, from July 2010 to mid-2011, and from 2012 to 2014 have seen bitcoin soar just less than 40,000% and 55,000% respectively.
Described by some as "digital gold", bitcoin is increasingly going mainstream. In December, the Chicago Mercantile Exchange will launch a bitcoin derivatives contract, "which means the herd is coming", said Becker. "In other words, way more money is on its way here. When big money funds start putting 1% of their portfolios in [bitcoin], hell’s bells."
In an October note to clients, Allan Gray portfolio manager Jacques Plaut wrote: "I don’t know whether bitcoin deserves to be classed with episodes like tulip mania. I see some similarities with previous bubbles, but all the signs are not yet there. For example, the abuse of debt in some form is a standard feature of any bubble, and I’m not aware that people are using it to buy bitcoin, yet."
Some brokers are becoming increasingly worried about bitcoin’s parabolic ascent.
Neil Wilson, a senior market analyst at ETX Capital, told the Financial Times that bitcoin was "following the playbook for a speculative bubble to the letter".
But Becker points to the fact that only about 30-million people worldwide own bitcoin — the most recognisable of the world’s cryptocurrencies, which was created in 2009 by the mysterious Satoshi Nakamoto, a pseudonym for what may or may not be a single individual.
Bitcoin is based on a technology known as blockchain: a centralised "ledger" on which every transaction is recorded transparently for everyone to see in real time.
When Business Day’s sister publication the Financial Mail published a cover article on bitcoin in October, South Africans were responsible for the third-most internet searches for the term, after Nigeria and Bolivia.
Meanwhile, Luno — the cryptocurrency exchange, which is backed by both Naspers and Rand Merchant Investments — on Tuesday signed up its 1-millionth customer, according to cofounder Marcus Swanepoel.