The dramatic rise in the price of Bitcoin during the last few months had an even more dramatic spike this week, with the cryptocurrency rising from below $16,000 to $19,500 in less than an hour on GDAX, the major US-based exchange on Thursday. The cryptocurrency increased in price by 40 percent in 48 hours before Friday, and market experts started whispering about the upcoming price collapse, Reuters reports.
The dramatic rise ended eventually in a dramatic drop that happened at around 12:00 GMT Friday, with Bitcoin hitting the $13,482 point on the Bitstamp exchange.
By GMT 1:34 Saturday, though, the cryptocurrency was being traded at the $15,378 mark on Bitstamp, signaling a possible speculative frenzy.
Craig Erlam, senior market analyst at OANDA in London, points out that the Chicago-based Cboe Global Markets exchange is due to launch a futures contract on the digital currency, to be followed by the CME Group next week.
In his short essay on the recent prices of Bitcoin, Chaffin provides a chart of the cryptocurrency's price showing Bitcoin's value bounce up and down in a strikingly chaotic pattern he calls "insane."
He underscores that "no one knows precisely" what drives cryptocurrency prices to behave in such a wild fashion. In any market, he writes, prices rise when you have more people buying than you have people selling.
"Bitcoin is insanely volatile right now. And worse, it might have peaked or it might be at the bottom of a huge climb to the moon. It could crash at any time. Or not," he writes on the website.
Analyzing the price pattern Chaffin suggests not buying Bitcoin right now at all.
"In 5 years, it could be worth $100,000 or zero. Or anywhere in between. Bitcoin's past is no guarantee of its future," he writes in a sort of a disclaimer inject.
Interestingly enough, other cryptocurrencies have not met with a similar fall, as they've just kept rising while Bitcoin displayed its breathtaking rollercoaster ride, Business Insider reports.
The website also notes that the incredible 15-fold rise in Bitcoin's price during the last year might foreshadow a Bitcoin bubble exploding "in dramatic fashion" in the near future.