Bitcoin Futures, Elon Musk And Michael Novogratz

If there’s one thing you count on with Bitcoin, it’s that the cryptocurrency is never dull.

The week, the value of Bitcoin has exploded to a record high. At the time of writing, the price as shown by Coindesk is just under $9,900, near the psychologically important $10,000 level for the first time. In overnight trading, the value cryptocurrency hit as high as $10,086 today on data source CoinMarketCap. It has yet to breach the $10,000 level on Western exchanges.

According to former Fortress hedge fund manager Michael Novogratz, $10,000 could be just the start for Bitcoin. In an interview on CNBC earlier this week, Novogratz proclaimed that over the next few years the value of the currency could rise as high as $40,000. He went on to say that as well as Bitcoin’s rally, the total market capitalization of all digital coins could increase by about six times to $2 trillion at the end of next year up from $304 billion currently.

geralt / Pixabay

Bitcoin Futures, Elon Musk And Michael Novogratz

Novogratz's price target is based on the notion that there's no "supply result" for these currencies. Unlike other commodities, where prices are defined by supply and demand, which usually results in boom-bust cycles, increased demand for Bitcoin cannot be met with higher supply.

"What's different about these coins than other commodities ... there is no supply response here," Novogratz said. "So it's a speculator's dream in that as buying happens there's no new supply response that comes up. So every price move gets exaggerated. It's going to get exaggerated on the way up. There will be 50 percent corrections. It will get exaggerated on the way down." When you look at the market from this perspective, there's really no reason why the asset cannot hit $40,000 or even $1 million over time as speculators rush to buy the limited supply of 21 million coins.

A day after Novogratz appeared on CNBC, rumors started doing the rounds that the creator of Paypal, Tesla, and SpaceX, Elon Musk is one of the creators of Bitcoin. This claim, which was quickly rubbished by Musk himself on Twitter, originated from Sahil Gupta, a former intern at SpaceX, who theorized in a blog post that "Satoshi is probably Elon."

Not true. A friend sent me part of a BTC a few years, but I don’t know where it is.

— Elon Musk (@elonmusk) November 28, 2017

It is widely believed that Bitcoin's latest surge is a result of the decision by the Chicago Mercantile Exchange (CME) to launch bitcoin futures in December. Since this announcement, the value of the cryptocurrency has risen by 50%. CME's product launch will give Bitcoin some legitimacy, and open the asset to hedge fundsand asset managers that have previously been scared away by concerns about the safety of non-regulated exchanges. A contract will also help smooth some volatility. CME will not allow the trading of bitcoin futures at prices 20% above or below the settlement price from the previous day, according to the exchange’s website.

CME's product might help bring Bitcoin into the mainstream, but the digital coin will remain a speculative instrument for a long time to come. As Neil Wilson, a senior market analyst at ETX Capital put it:

"The only way it has value is if the next guy is willing to pay you more for it – the greater fool. With no intrinsic value to Bitcoin, it’s hard to see this as anything other than a giant speculative bubble.”