Bitcoin soared to an all-time high above $11,000 on Wednesday on major exchanges and digital currency indexes, including the widely followed Luxembourg-based trading platform Bit Stamp.
The digital currency spiked through $11,000 Wednesday morning, hours after surpassing the $10,000 level for the first time. By 9:16 a.m. ET, bitcoin had leaped all the way to $11,377.33, according to Coin Desk. Bitcoin was recently trading at $10,905.48, according to the digital currency exchange.
Created in 2009, bitcoin uses encryption and a blockchain database that enables the fast and anonymous transfer of funds outside of a traditional centralized payment system.
It has increased more than 10-fold in value so far this year, posting the largest gain of all asset classes, amid increased institutional demand for crypto-currencies as financial and mainstream use has expanded.
But skeptics say it a classic speculative bubble with no relation to the real financial market activity or the economy, most famously JPMorgan boss Jamie Dimon who labeled it a fraud.
Bitcoin crossed $10,000 on smaller exchanges such as the CEX.IO exchange, and the crypto-currency index coinmarketcap.com long before it hit the milestone on Bit Stamp.
“The price rise is a continuation of a long-term trend which has been driven by the speculative activity in Japan and also with institutional investors dipping their toes into the cryptocurrency market,” said Thomas Glucksmann, head of marketing at Hong Kong exchange Gatecoin.
“The recent surge is just part of that additional element of excitement amongst speculative traders and a growing contingent of liquid traders that have a long-term optimistic view on … this technology.”
Sol Lederer, blockchain director at US technology company LOOMIS, said this surge will help long-time bitcoiners finally feel vindicated that their currency, which had been ridiculed for years, was, at last, being taken seriously.
“Bitcoin’s future is still uncertain; it faces the same serious technical challenges it has for years and faces stiff competition from newer, more sophisticated blockchains. But even if it were to crash, it’s apparent that bitcoin is here to stay.”
In some emerging markets, bitcoin had hit well over $10,000 previously. In Zimbabwe, bitcoin traded at $17,875 on Monday. Tuesday’s price in Zimbabwe was not available.
In South Korean exchanges, bitcoin was already close to $11,000 or higher early this week.
It traded at nearly $12,000 on Tuesday on bethumb after hitting the $10,000 milestone on Monday. At Coinone, it traded at near $12,700, and it was up 10 percent in 24 hours at $12,792 on Korbit.
Bitcoin has been boosted as exchanges such as the CME Group Inc and the Chicago Board Options Exchange announced plans to launch futures contracts for the currency.
“I’m sure there will be a few dips over the next weeks and months as the cryptocurrency market is quite illiquid so there’s bound to be volatility,” Gatecoin’s Glucksmann said.
Mike Novogratz, a former macro hedge fund manager at Fortress Investment Group, said in a Reuters Investment Summit earlier this month that mainstream institutional investors were about six to eight months from adopting bitcoin.
But many leading bankers, including Credit Suisse Chief Executive Tidjane Thiam, have expressed skepticism about bitcoin.
“From what we can identify, the only reason today to buy or sell Bitcoin is to make money, which is the very definition of speculation and the very definition of a bubble,” Thiam said earlier this month.