According to Vitor Constancio, the European Central Bank’s (ECB) current vice president, purchasing bitcoin in the current price range is a risk for investors.
Bitcoin is a “very particular asset,” Constancio said and went on to explain his view of it additionally being a “…speculative asset by definition looking to the developments in its price. Investors are taking that risk of buying at such high prices.”
In the past week, the price of bitcoin spiked over $11,000, oscillating around this psychological before making a bullish advance toward $11,800 on December 3. Various altcoins have not been far behind, rising in unison with the leading cryptocurrency, although less drastically.
Unperturbed by its ups and downs, many remain hopeful for the future of bitcoin. There has been speculation that it may climb as high as $40,000 by the end of 2018, with billionaire investor Mike Novogratz being one of the most famous advocates of this belief. Novogratz additionally predicted a market cap of $2 trillion for the same year.
He did mention, however, that there are likely to be significant crashes to accompany the surges, as the technology struggles to match the pace bitcoin has set.
In an almost uniform approach, the majority of central banks have been hesitant to embrace the cryptocurrency market, presumably due to the high-risk attached the reward. Vitor Constancio said earlier in November that the fiat system would never be replaced by digital currencies.
Mario Draghi of the ECB put forward a statement that the reason for the bank’s apprehension was simply the maturity of cryptocurrencies. Although deemed not mature enough for regulation, he conceded that the ECB had been keeping a close eye on bitcoin’s development, as well as that of other digital currencies and the latest fintech products.
According to him, although innovation has its benefits, it should also be “critically assessed” for potential uncertainties or threats.
Draghi later mentioned that the threat cryptocurrencies pose to traditional banks is negligible.
Despite its associated highs and lows, harsh criticisms and wild speculations, cryptocurrency appears to be here to stay. In a recent article by CNBC, individuals have been paying their rent and even purchasing real estate using bitcoin. Japan has been marked as the country with the most widespread bitcoin usage, accepting it as a payment method in over 4500 stores.
As such, it is difficult to predict just where the cryptocurrency will go, but it is clear that it has a long path ahead of it.