Surging bitcoin crosses US$10,000 threshold despite trading clampdown

The virtual currency has continued its meteoric rise amid regulatory scrutiny and scepticism from critics who call the rally unsustainable

PUBLISHED : Wednesday, 29 November, 2017, 4:00am
UPDATED : Wednesday, 29 November, 2017, 11:42am

Bitcoin has crossed the US$10,000 mark, according to some US media outlets monitoring the cryptocurrency, continuing its meteoric rise even as governments including China clamp down on trading and critics say the rally is unsustainable.

The virtual currency reached the long-awaited milestone at 1.26pm ET on Tuesday (2.26am Hong Kong time on Wednesday), Business Insider reported, citing data from Markets Insider. CoinDesk, a digital currency news and information site, pegged bitcoin’s high as of late Tuesday afternoon in the US at $9,969.12.

While stock markets around the world have reached all-time highs this year in spite of expectations that the US Federal Reserve might be raising interest rates, their gains are relatively insignificant compared with bitcoin’s performance.

Bitcoin is the most traded digital currency that can either be held as an investment, or used as a foundation for future applications through its underlying blockchain technology.

Blockchain is essentially a public ledger of all virtual currency transactions. It allows market participants to track digital currency transactions without requiring central record-keeping.

Virtual currency trading has been under regulatory scrutiny globally. In September, China’s central bank banned fundraising through digital currencies, calling the practice illegal. The People’s Bank of China (PBOC) said that 90 per cent of initial coin offerings launched in China were found to be fraudulent.

In the same month, China asked all local bitcoin exchanges to halt trading altogether.

Bitcoin closing in on US$10,000 as hedge funds pour into cryptocurrency

China was number one in bitcoin trading before the ban and the clampdown of exchanges. Authorities are concerned that bitcoin’s explosive growth might trigger a meltdown of the unregulated market, leading to financial losses.

Singapore, on the other hand, has sought to embrace virtual currency by announcing that it has prepared a framework for virtual currency intermediaries, boosting confidence among exchanges.

In spite of regulatory uncertainty, bitcoin has surged more than tenfold since the start of the year, making it the best performing asset in the world.

Bitcoin and blockchain are regarded as the most disruptive forces to come to areas such as cross-border payment and transactions in the technology market. Already billions of US dollars have been invested in blockchain start-ups globally. However, those in banking and asset management remain split over the virtual currency’s future.

As with other digital currencies including ethereum, bitcoin uses blockchain technology, which stores transactions in transparent, shared databases. This transparency protects transactions from deletion, tampering and revision and eliminates the need for central exchanges.

Bubble or breakthrough? Bitcoin keeps central bankers on edge

Sceptics such as Jamie Dimon, chairman and CEO of JP Morgan Chase, the largest US bank, have dismissed bitcoin as a “fraud” that eventually will “blow up”.

Khaldoon Al Mubarak, who heads one of the world’s largest sovereign funds, Abu Dhabi’s Mubadala Investment Company, told CNBC this week that while he is open-minded on bitcoin, he would like to see regulation of blockchain technology.