Bitcoin’s recent surge over $3,000 has made many experts question the valuation of the cryptocurrency. Traders are engaging in frenzied bitcoin transactions, which led to two major bitcoin exchanges becoming victims of cyber attacks last week. The cyber attacks led to the denial of service last week but the chances of another, more serious attack cannot be ruled out. Rising investor interest in the currency has overwhelmed the exchanges as well, which is making the prices rise to exponential levels. Here are three reasons why there is bitcoin frenzy all around.
Bitcoin is Fashionable
The latest trend in the world of investments is bitcoin. Coin Jar CEO Asher Tan said, “Digital coins are very much in vogue now.” The extremities of bitcoin gains intrigue many first-time investors. The currency has reached record levels this year and more than tripled in the past few months alone. Some investors want quick gains with bitcoin because of which they are rushing towards coin exchange. The overwhelmed exchanges have even crashed recently following the frenzy.
Speculative Trade is Increasing
Bitcoin is more susceptible to speculative trade than other securities and currencies. People looking for quick gains over the currency are now flooding the bitcoin currency with their money. Millions of dollars are flowing in the currency spectrum because of which there are chances of an even higher price. Some experts even suggest that if hedge funds dive into the bandwagon, then the rates of bitcoin could go as high as $10,000.
Hedge funds are known to follow a herd mindset. If one hedge fund invests somewhere, others are bound to follow. This would mean enormous amounts of cash in the currency, followed by a surge in price. Speculators are waiting for such an interesting turn of events that could bring them enormous returns within a short span of time.
Investing has never been easier than bitcoin. The total sales of last year’s bitcoins have already been surpassed this year. Coins worth more than $100 million have been raised in this year alone. The total issuance of these coins could easily cross $600 million. Nick Tomaino, principal and Runa Capital, a San Francisco based venture capital firm says that bitcoin is running on hype. He mentioned that bitcoin “can’t be stopped.”
“There’s a lot of hype, and a lot of money being raised because it’s so easy for anyone to create these coins without having to deal with any third parties, and it’s so easy for people to buy them,” said Tomaino.
Some investors remain skeptical of bitcoin. They see a solid future for blockchain and digital currency but aren’t convinced that bitcoin is being traded at the right value.