Dubai:
A day after Jamie Dimon, the chief executive of JP Morgan, branded Bitcoin as fraud, reviving an old debate, Bitcoin traders see the 10 per cent price fall as a temporary blip, before it resumes the stellar rally.
The swift rise in Bitcoin prices from $1,000 (Dh3,673) in January to around $4,000 now, and a general lack of acceptability by governments and central banks, has raised eyebrows among traditional fund managers at a time when the cyrpto currency has trounced every other asset class in terms of returns.
“This is not for the first time that Dimon has branded Bitcoin as fraud. He has been doing that, but the demand is just growing. If we see the adoption, there has been massive demand, so be it from sovenueir wealth fund priced in Bitcoin from an eastern European country, or paying rents in Dubai,” Naeem Aslam, chief market analyst with Think Markets told Gulf News.
Bitcoin prices have fallen more than 21 per cent since September 1 from a high of near $5,000. The Bitcoin market has shed $18.5 billion in market value.
“Jamie Dimon’s statements are noise right now, but that has created some volatility. In terms of technical standpoint, there is an opportunity to buy,” Aslam said.
He expects prices to recover from the sub-$4,000 levels, and sees a gradual rise to $5,500 by the year-end.
The price forecasts are being given in the backdrop of growing speculation that China, which mines most of the world’s Bitcoin, may launch a crackdown on exchanges. Beijing has already decided to ban initial coin offerings, which are used to raise funds with new digital tokens.
But Dimon feels that the price rise is a bubble. He likened the current price rise in Bitcoin to the first recorded market bubble in 1600s, when Tulip bulbs sold for more than 10 times the annual income of a skilled craftsworker.
John McAfee, chief cybersecurity Visionary of MGT Capital Investments, who is a bitcoin miner, has a simple argument for Dimon: “it costs $1,000 to create a Bitcoin ..., which is a proof of work with massive amount of super computers and electricity. What does it costs to create a US dollar.”
