Investors flocking into bitcoin are taking a risk by buying at such high prices, the vice president of the European Central Bank (ECB) Vitor Constancio told CNBC Wednesday.
“It’s a very particular asset, it’s a speculative asset by definition looking to the developments in its price. Investors are taking that risk of buying at such high prices,” Constancio noted.
In just over the last year bitcoinhas gone from under $1,000 to passing the $10,000 marker. Earlier in the week, the global cryptocurrency market broke through the $300 billion milestone, showing that the appetite for digital currencies is on the rise.
Constancio told CNBC that the price of bitcoin is likely to fluctuate more, but this is not set to hurt other markets in any way.
“Certainly I don’t think it would spread to other markets,” he said.
Central banks have been reluctant in giving any credit to digital currencies. ECB President Mario Draghi said at a press conference in October that cryptocurrencies are not “mature” enough to be considered by the ECB for regulation.
“With anything that’s new, people have great expectations and also great uncertainty. Right now we think that especially as far as bitcoins and cryptocurrencies are concerned, we don’t think the technology is mature for our consideration,” Draghi said.
Constancio voiced a similar view on Wednesday.
When asked when central banks will take cryptocurrencies seriously, he said: “We don’t have to, in the sense that we don’t have responsibility or even instruments that point to particular prices of particular assets, that is certainly not the role of central banks.”
Despite being talked down by some major financial names, not least JPMorgan CEO Jamie Dimon, it looks like cryptocurrencies could be here to stay.
And this recent rally in bitcoin might not be over just yet, according to some commentators. The man who called bitcoin’s rise to $10,000, fund manager Michael Novogratz, has over 20 percent of his net worth in cryptocurrencies and told CNBC that he sees the possibility of it reaching $40,000 by the end of next year.
Buying bitcoin at this 'high price' would be a risk, ECB vice president says