With the crypto currency Bitcoin flirting with the $10,000 mark, two top institutional investors are confident that the price will continue rising in the near to mid-term future.
Hong KoKong-based cryptocurrency exchange Gatecoin’s marketing chief has stated that bitcoin price, despite these boom times, is “undervalued.”
In a televised interview with Bloomberg, Gatecoin’s marketing chief and head of business development for Asia Pacific Thomas Glucksmann was led onto the subject of bitcoin’s “fair value”, at a time when prices are nearing $10,000 – a remarkable 10x gain since the turn of the year. The bitcoin executive professed the market remains relatively “illogical” compared to traditional financial assets where price predictions are analyzed over usual valuation metrics.
Asked if it was “impossible” to determine bitcoin’s fair value, Glucksmann acknowledged and replied:
“I would still argue that it is highly, highly undervalued. If you look at the long-term potential of the technology in the next 10, 20, 30 years, $10,000 is cheap in my opinion”.
While bitcoin is now seen in the mainstream as a store of value among retail investors, it remains a peer-to-peer decentralized electronic cryptocurrency, a fact Glucksmann is keen to point out even if or when the cryptocurrency is valued at a million dollars. “Bitcoin is divisible up to 8 decimal places,” the Gatecoin executive told the interviewer, referring to the smallest fraction of a Bitcoin, also known as Satoshis (0.00000001 BTC – a hundredth of a millionth BTC).
“Even if one bitcoin is worth a $1,000,000, you could still have $1 USD worth of bitcoin which you could still transact peer-to-peer. It’s important to look at bitcoin in that way with that longer-term view”, Gluckman said.
At press time, data from CoinmarketCap reveals bitcoin price trading at $9,927 and topping $165 billion in the total market value of all 16.7 million mined bitcoins.
Gatecoin, which lays claim to being the world’s first exchange to list Ethereum’s ether tokens in mid-2015, suffered major operational disruption in recent months after Hong Kong banks abruptly froze its accounts, forcing the exchange to suspend HKD and USD deposits from customers at a time when the exchange had ‘tripled’ its customer base following bitcoin’s price gains. The exchange found respite with new banking partners in Europe and is scheduled to resume bank transfers in December.
The exchange also added support for Litecoin this month, enabling users to buy and sell the alternative cryptocurrency with bitcoin, ether and the Euro. In his remarks today, Glucksmann underlined Litecoin as an “underrated cryptocurrency” that shares many similarities with bitcoin without suffering the same “scaling issues” that has often plagued its development and community.
Wall Street strategist Bob Doll said that the record-setting bitcoin price rally may be predicated on investor speculation, but that does not detract from the fact that it is on an “amazing run”.
Doll, chief equity strategist at Nuveen Asset Management, told CNBC that bitcoin’s meteoric rise “feels speculative” but has been fascinating to watch.
“‘With bitcoin, why do you need the stock market?’ has been the saying of late,” Doll said. “I confess it’s an area of that to me feels speculative, but you might call me old or old-fashioned. It’s been an amazing run, has it not?”
Despite several severe corrections, the bitcoin price has sustained its upward trajectory throughout the year. However, the markets have gone absolutely berserk in the fourth quarter. Since entering the quarter at $4,341, the bitcoin price has leaped by more than 120 percent. Monday morning, it reached a new all-time high of $9,771, placing it within $250 of entering five-figure territory for the first time.
At present, the bitcoin price is trading at a global average of $9,690, according to data obtained from CoinMarketCap. Bolstered by bitcoin, the combined market capitalization of all cryptocurrencies has become greater than the valuations of either Bank of America, Wells Fargo, or Visa.
To Doll’s point, bitcoin’s recent explosion appears linked to speculation that Wall Street investors are placing the final touches on plans to make strategic entries into the cryptocurrency markets, beginning with bitcoin futures trading on U.S. derivatives exchange CME but eventually extending to holding the assets directly, perhaps through a third-party storage service such as Coinbase Custody.
Reflecting on this quarter’s dramatic market movement, ShapeShift CEO Erik Voorhees advised investors with significant cryptocurrency holdings to take some profits and pay off their consumer debt. He also cautioned euphoric investors to not take on more debt to buy bitcoin or other cryptocurrencies (even though this gamble has paid off in the past).
Nevertheless, many analysts believe that bitcoin will continue ascending to new heights for the foreseeable future. Fundstrat co-founder and market strategist Tom Lee, for instance, recently raised his mid-2018 bitcoin price target to $11,500, while Standpoint Research’s Ronnie Moas has set his 2018 target at $14,000.