Bitcoin entered uncharted territory on Wednesday after breaching $10,000 for the first time, leaving investors to wonder how long the rally will go — and whether it will end in tears.
Here’s what bitcoin watchers are saying about the dizzying rally.
Stephen Innes at Oanda
“I’d be a little bit worried on a falling knife scenario,” said Innes, head of trading for Asia-Pacific at Oanda Corp. in Singapore. “Are current investors prepared for this? No, of course not.”
Longer term, cryptocurrencies will gain more credibility as CME Group Inc. starts selling bitcoin futures and other mainstream institutions get involved, Innes said. For now, he sees a short-term pullback of 3 percent to 6 percent as investors take stock of how much they’ve gained.
“When we’re starting to get into these crazy numbers, I’m a little bit fearful that retail traders are jumping in under the false guise of this will run on forever,” he said. “We know things never go in a straight line.”
Dave Chapman at Octagon Strategy
“Now, you’re getting an enormous amount of legitimacy and credibility in the bitcoin protocol,” said Chapman of cryptocurrency trading firm Octagon Strategy in Hong Kong. “Admittedly, there is an element of FOMO (fear of missing out). That’s not entirely healthy for the current market. There is a sizable amount of people investing in bitcoin purely on speculation.”
Chapman sees a correction coming, but is unsure how large it will be.
“I see possibly a correction but then also an immediate bounce-back just owing to the size of the market. People will double down and see it as a buying opportunity.”