Bitcoin surges over $15,000 despite 'Dante's Inferno' warning – as it happened

Graeme Wearden

from Economics | The Guardian on 2017-12-07 21:13 (#3A1NG)

Royal Bank of Scotland's chairman says central bankers should hang an 'abandon hope' warning over bitcoin

9.13pm GMT

Time to recap:

life is a highway pic.twitter.com/UebRu0uTXz

Bitcoin's market cap just passed Visa's.

Yes, that Visa:
Largest electronic payment processor in the world
$8.9 trillion in 141 billion transactions per year
Across 160 currencies and over 200 countries$BTC.X $V pic.twitter.com/BlRvSZwzDE

When the first bitcoin futures market goes live on Sunday, some Wall Street banks won't be part of the trade | https://t.co/Ly9nfcsbTe via @WSJ

9.12pm GMT

Wall Street has just closed for the day, with small gains on the main indices.

The Dow gained 70 points, or 0.3% - a performance matched by the S&P 500. The tech-focused Nasdaq rose by 0.5%, partly thanks to Alphabet (Google) and Facebook.

8.58pm GMT

Mark Hamrick,Washington bureau chief for Bankrate.com, reports that some investors aren't happy about missing out on bitcoin:

Financial advisor, CFP just told me that one of his customers berated him for failing to recommend bitcoin. He told him he knows about some tulip investments he could look into. #history

8.31pm GMT

8.26pm GMT

Two major US banks have decided not to offer bitcoin futures trading when it launches this weekend.

That follows concerns (covered in this blog earlier today) that the systems aren't robust enough.

Bank of America Merrill Lynch and Citigroup Inc. are telling customers that they won't offer them access to the first bitcoin futures market when it goes live on Sunday, people familiar with the matter said.

Goldman Sachs Group Inc., the largest U.S. futures broker, will offer access but only for certain customers, a person familiar with the situation said. ABN Amro Group will be handling trades for "a small selected group of professional clients," a spokeswoman for the Dutch bank said in an e-mail. Morgan Stanley and Socii(C)ti(C) Gi(C)ni(C)rale SA are still evaluating their approach to bitcoin futures, other people said Thursday.

Bullish traders drove #bitcoin above $19,000. But Wall Street heavyweights are hitting the pause button ahead of a hotly-anticipated futures launch. scoop with @aosipovich @littlewern @alyrose https://t.co/PRxJJHO8Ql #crypto

8.23pm GMT

CNN's Seth Fiegerman joined the bitcoin party last week, when he invested $100 in the digital currency.

He's now written a handy explainer - here's a flavour:

Bitcoin exchanges have a checkered history. Mt.Gox, once the largest exchange, shut down in 2014 after losing hundreds of millions of dollars worth of bitcoin after a hack.

Today, the leading exchange is offered by Coinbase, a startup that has raised more than $200 million from a number of top tier venture capital firms. Square (SQ), the payments service, is also rolling out a bitcoin product.

Alt headline: How Bitcoin Nearly Destroyed My Marriage https://t.co/DfTILJ9MaT pic.twitter.com/Qfq2tVS3f1

7.49pm GMT

City investor Justin Urquhart Stewart reports that his cabbie is interested in bitcoin....

Taxi driver today not only recommends Bitcoin but also said he had borrowed to buy more!

7.34pm GMT

Right now, bitcoin is trading at $15,300, according to the 'spot price' on my Reuters terminal.

That's a gain of 12% today, and up over 40% since the start of the week

7.29pm GMT

Some bitcoin exchanges are struggling to handle the interest today, it seems.

Coinbase, the largest US bitcoin, blamed 'record high traffic' for technical problems:

We are currently experiencing record high traffic. This is resulting in some customers having slow performance or issues logging into their https://t.co/bCG11KveHS accounts. We are actively working to resolve this as quickly as possible.

We're currently experiencing minor issues with our servers. We are working to resolve the issue as quickly as possible. Thank you for patience!

6.57pm GMT

Ian Guider of Ireland's Sunday Business Post spies a bubble...

Bitcoin in last couple of day. Up 20% today alone. Yes, that's what normal assets do. Absolutely nothing bubble-like about it. Now, can we sell you some tulips? Or maybe matchsticks? pic.twitter.com/uva2Oat3K8

6.06pm GMT

Speaking of volatile trading, bitcoin prices on the coinbase exchange just rocketed towards $20,000.

But it swiftly slumped back to less stratospheric levels.

Bitcoin soars to almost $20,000 on Coinbase exchange https://t.co/Yv9G75GQa0 pic.twitter.com/mbLZnK1uTd

5.52pm GMT

The bitcoin price has been particularly volatile today, as it struck a series of new highs:

Bitcoin passes the $16,000 mark. Here's the latest https://t.co/nCX3wJkg2C pic.twitter.com/1b62Iw9q6V

5.31pm GMT

Economics professor Justin Wolfers has put his finger on the problem with bitcoin pricing - it's hard to bet against it today.

It's easy for bulls to go long bitcoin.

It's extremely difficult for bears to short it.

Bubbles happen when prices reflect only one end of the range of opinions. https://t.co/GCx7hTrhqN

5.20pm GMT

The launch of bitcoin futures markets on Sunday night will be an important moment, says Neil Wilson of City firm ETX.

But he doesn't agree that letting traders bet against bitcoin necessarily means its price will fall.

At least with regulated futures the market ought to behave more normally than it has done - notwithstanding some pretty major spasms in the market that are likely on Sunday night and Monday morning as the contracts launch - and this would be net bearish for Bitcoin overall as it will allow proper shorting and hedging strategies.

At present the only way to short is to sell your bitcoin and exit the market, a bias that favours bulls. The ability to go short creates a new dynamic in the market and may result in a significant shock to prices. The problem is anyone shorting against this headwind of rapidly rising prices needs to be able to sweat out huge potential upside. As plenty before have noted, Bitcoin might keep rising longer than shorts can stay solvent."

4.19pm GMT

If you're just tuning in, here's our news story on Bitcoin's rally, and the concerns building about it.....

Bitcoin has been likened to Dante's Inferno by the chairman of Royal Bank of Scotland. As the digital currency surged above $15,000 on Thursday, Sir Howard Davies suggested it should carry a similarly apocalyptic warning for investors.

Davies, a former head of the UK's top financial watchdog, called on the Bank of England and other authorities around the world to launch a coordinated warning against the digital currency.

4.19pm GMT

Analyst Charlie Bilello of Pension Partners points out that bitcoin usage isn't keeping pace with its price:

Bitcoin transactions per day are up 27% in the past year. Price of Bitcoin is up 2,100%. $BTC.X pic.twitter.com/Wuep85vYRp

4.16pm GMT

A majority of City investors think that bitcoin is an unsustainable bubble.

That's according to a survey of institutional investors, conducted by Natixis Investment Managers, which found:

Institutional investors may believe bubbles have formed in both the bond (42%) and stock (30%) markets, but concerns for these traditional assets pale in comparison to the 64% who say there's a bubble in Bitcoins.

3.57pm GMT

Over on FT Alphaville, Izabella Kaminska has a fascinating theory to explain bitcoin's rise.

In short, it's that certain investors have piled into bitcoin, driving its price every higher, because they plan to 'short' it next week. Shorting becomes a serious option once the CME clearing house launches its derivatives contracts next week.

Without the certainty of a properly regulated marketplace defending the futures side of the equation, a payoff cannot be guaranteed. It's why the arbitrage exists in the first place: the trade cannot be exercised elsewhere in the bitcoin ecosystem because the risk of counterparty default at the first sign of distress is far too great. You'd win the trade, but you'd probably lose the payout.

If a regulated futures market takes that risk away, however, the trade becomes a no-brainer if not a mastermind opportunity.

3.33pm GMT

Wowzers! Bitcoin has now surged to $16,000 on one exchange:

Bitcoin broke record.... again. Here's Bitcoin 16k: pic.twitter.com/ja7dL4K7Op

The cryptocurrency has undoubtedly come on leaps and bounds this year but it's difficult to see anything move as Bitcoin has and not fear a devastating bubble bursting. I don't think it's a coincidence that Bitcoin has been making headlines over the last week or so, during which time it's risen another $5,000, or 50%.

If speculation is playing as big a role in the latest moves as some expect, then very interesting times may lie ahead. Although as is always the case, this could rise a lot more before the bubble bursts.

3.26pm GMT

The Guardian's Business Today email has expanded its property coverage.

As well as key news headlines, an agenda of the day's main events, insightful opinion pieces and a quality feature, there is now more coverage of house prices, mortgages, the rental market - and the best picture galleries from our Money pages.

3.13pm GMT

So, where are all these people who have made fortunes out of bitcoin?

The Daily Telegraph have found one - and he's still just a teenager. They say:

Eddy Zillan was 16 when he began investing in bitcoin, just two years later, the youthful investor estimates he has "made close to a million" from trading in various cryptocurrency.

The perspicacious Ohio teenager was an early adopter of the bubble and bust digital currency, investing in 2015 when bitcoin's price was as low as $214 following a prolonged bear market.

Teenage bitcoin investor turned bar mitzvah money into $500,000-plus profit https://t.co/mC0uKt4BAS

3.04pm GMT

Here's a useful non-technical explanation of bitcoin:

Why bitcoin is making banks nervous https://t.co/NlyFfk3QG2 #technology pic.twitter.com/73YIOpJXsC

2.44pm GMT

Anyone who bought bitcoin two weeks ago (when it was trading at $8,000) has almost doubled their money.

They won't give you that at your local bank! But, of course, that's exactly why some experts fear that a speculative bubble is building.

2.16pm GMT

Bitcoin buyers aren't heeding Sir Howard Davies's warning.

The cryptocurrency just hit a new alltime high, at $15,200, as American traders arrive at their desks.

1.37pm GMT

Just in: The US jobs market remained strong last week.

Just 236,000 Americans filed new claims for unemployment benefit during the seven days to 2nd December. That's down from 238,000 the previous week, and the third weekly decline in a row.

US weekly jobless claims total 236,000 vs 240,000 expected https://t.co/HTzWEMcj8n

1.19pm GMT

Bitcoin price - up 23% in a single day, people. pic.twitter.com/d79FzrGokN

1.12pm GMT

Yann Quelenn of Swissbank believes bitcoin will keep climbing this month, perhaps even hitting $20,000 -- before suffering an abrupt reversal.

Quelenn writes:

Sheer greed is driving the cryptocurrency higher, perhaps to $20,000 per coin by Christmas. This would put Bitcoin's market cap above $300bn, one third that of Apple! Bitcoin is unique in history, true, but a correction will likely be very tough.

Two Chicago exchanges, the CBOE and the CME, will soon launch trading of cryptocurrency futures. This signals an impending stampede of institutional investors - many speculators, some hedgers. Just watch the fireworks fly.

Bitcoin latest:

" It's passed $15,000
" Yet another record
" Up 50% this month
" 1,300% rise in 2017https://t.co/midqRIa0fa pic.twitter.com/gD2RvcdgC6

12.59pm GMT

Sir Howard Davies's hint that bitcoin is a hellish investment for the unwary is somewhat ironic, given the track record of the bank he chairs.

Royal Bank of Scotland has been controlled by the UK taxpayer for nearly a decade, having been bailed out after nearly collapsing after the failure of Lehman Brothers.

12.29pm GMT

Workers at GE Power have just had a very nasty shock. The US company is axing 12,000 jobs across the globe in a cost-cutting drive.

"Traditional power markets including gas and coal have softened".

11.47am GMT

Jerry Yang, the co-founder of Yahoo!, is more optimistic about bitcoin's future.

Yang reckons digital currencies can be a force for good in the long term.

"Bitcoin as a digital currency is not quite there yet.

Personally, I am a believer in how digital currency can play a role in our society" but for now, it seems like it's more driven by the hype of investing and getting a return rather than using it as a transaction currency.

I'm a believer bitcoin can play a role in our society, Yahoo co-founder says https://t.co/2I0zIVg063 pic.twitter.com/znkL1EQbMY

11.29am GMT

The FT points out that Bitcoin has hit $15,000 on some crypto-exchanges.

Bitcoin crosses above $15,000 on some exchanges https://t.co/LXyDGCH5GC pic.twitter.com/nXWfsAt0eg

10.58am GMT

Sir Howard Davies, the chairman of Royal Bank of Scotland, has issued a dire warning against investing in bitcoin.

Speaking on Bloomberg TV, as bitcoin headed towards $15,000, Davies warned that the digital currency looked like a "frothy investment bubble".

All the authorities can do is put up the sign from Dante's Inferno - 'Abandon hope all ye who enter here'.

That's what's needed, and it need to done by the Federal Reserve, the SEC, and the Bank of England and the European Central Bank at the same time.

The market is telling us something about the need for new faster payments systems. [But] I personally don't think it's bitcoin in the long run.

RBS Chairman Howard Davies says he "can't see" how bitcoin could be outlawed after it hits $15,000 for the first time https://t.co/XtCJvRsF84 pic.twitter.com/6URAAM7yr4

10.55am GMT

Here's our story about the problems at NiceHash:

10.39am GMT

The pound's volatility has hit its highest level in almost six months, as Brexit headines shunt sterling around:

Sterling volatility and deepening Brexit chaos going hand in glove. Gap between 1-month GBP/USD vol and EUR/USD implied volatility has shot up this week and is now close to the widest since the general election in June. cc @bondvigilantes pic.twitter.com/ziWxAQxG3S

10.21am GMT

The old mantra Caveat Emptor goes without saying where bitcoin is concerned.

Not only is its value uncertain ('higher than yesterday' won't be true forever), but you run the risk of losing your bitcoins to a cybercriminal.

9.54am GMT

More reaction to Bitcoin's latest spike:

Most common thing to say in the morning currently:

1 - You seen #Bitcoin?
2 - How about that weather
3 - You seen Bitcoin?

Bitcoin gained more in the last two hours than it was worth in January.

9.47am GMT

Fiona Cincotta, senior market analyst at City Index, says Bitcoin's rise looks unstoppable -- but the launch of those bitcoin futures could change things.

Bitcoin bulls have driven the virtual currency beyond $14,500 for the first time. The bitcoin has jumped 20% over the last 24 hours with buyers of the virtual currency now eyeing up $20,000.

Given the fact that both the CBOE and the CME exchanges will begin offering bitcoin futures this month, perhaps the prediction of $20,000 is not that far off? However, the start of futures trading also means the start of short trades on the bitcoin, which could increase volatility further.

9.20am GMT

Now this is interesting.

The world's largest banks are pushing back on the introduction of bitcoin futures, raising concerns with US regulators that the financial system is ill-prepared for the launch of the contracts as the value of the volatile cryptocurrency has soared.

Institutional investors have been keen to trade the asset but only via a regulated market. However, the planned launch in the next 10 days of futures contracts by the Chicago exchanges CME Group and CBOE Global Markets, given a green light from the Commodity Futures Trading Commission last week, has prompted a backlash among the major brokers who backstop trading across the industry.

Big banks push back on launch of bitcoin futures https://t.co/f1YhkNQV18

9.03am GMT

Newsflash: UK house prices kept rising last month, according to the latest data from Halifax bank.

Halifax: UK House prices rose by 0.5% between October and November, following a 0.3% increase in October marking the fifth consecutive monthly rise.

"The improved performance of the market in the latest quarter suggests the first interest rate rise in a decade may have ignited demand.

"On this evidence, the November rate rise has brought prospective buyers out into the open rather than sent them underground.

8.48am GMT

Currency traders may need to don their tin hats in the coming days, as the Brexit negotiations intensify.

Lee Wild, head of equity strategy at interactive investor, predicts plenty of volatility:

"Europe is the only show in town right now, and ongoing speculation around a solution to the Irish border issue has further dampened enthusiasm for sterling. A deal must be done by close of play Friday if Brexit talks are to move onto trade after next week's summit.

Reality is, deadlines will likely get extended, whisper from Brussels will raise and dash expectations, and we may or may not get anything at the end of it. Prepare for a volatile couple of days on the currency markets.

8.32am GMT

Merger news: GVC, the gambling giant behind Foxy Bingo and PartyCasino, is in talks over a 3.9bn takeover of Ladbrokes.

Shares in both companies have jumped in early trading (Ladbrokes surged by over 25%).

8.20am GMT

Geopolitical issues are high on the market's agenda today, says Marc Ostwald of ADM Investor Services:

Politics will again be to the fore as UK government attempts to find some compromise on the hypersensitive issue of the Irish border, while the fall-out from Trump's decision to recognise Jerusalem as Israel's capital threatens to escalate already enormous tensions across the Middle East, and quite obviously contradicts UN resolution 478.

8.02am GMT

Last night's price surge was remarkable, even by bitcoin's recent standards:

Bitcoin:
$0000 - $1000: 1789 days
* * *
$5000- $6000: 8 days
$6000- $7000: 13 days
$7000- $8000: 14 days
$8000- $9000: 9 days
$9000-$10000: 2 days
$10000-$11000: 1 day
$11000-$12000: 6 days
$12,000-$13,000: 17 hours
$13,000-$14,000: 3 hours

7.57am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The pound is under pressure this morning as traders worry that Britain may not get a Brexit breakthrough before Christmas.

If talks do not move on to the next stage of discussions in December then the terms of a transition period will likely be pushed back until the next European council summit of leaders in March, by which time many businesses in the UK will have had to make decisions over their location and investments in the country.

DUP source. "We're going to slow it all down. This is a battle of who blinks first - and we've cut off our eyelids."https://t.co/JHO4rllO4r

Another day, yet another #Bitcoin record. The crypto-currency has now broken through $14,000#Bitcoin14K pic.twitter.com/RJO5wAvFzv

Bitcoin isn't a bubble, it's the pin.

Bitcoin is a transaction tool, not a store of value. I

Its price is rising because new entrants are paying more for it (but crucially not to use it) and that's pumping the value of older participants.

This is - by any definition - a Ponzi scheme.

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