"This is irrational exuberance," Royal Bank of Scotland chairman Howard John Davies said of bitcoin. Picture / 123RF
Bitcoin touched US$16,000 for the first time overnight, extending its advance this month to almost 70 per cent as concerns mounted the cryptocurrency's rapid rise masks risks.
The world's biggest cryptocurrency is surging on expectations that new bitcoin derivatives products expected to begin trading this month will boost mainstream demand.
Some of the world's biggest brokerages criticized those plans on Wednesday, telling regulators the contracts have been rushed to market without enough due diligence.
Bitcoin jumped as much as 23 per cent to US$16,374 ($24,000), before paring gains in New York trading, according to Bloomberg prices. That takes the digital currency's surge this year to more than 1,500 per cent and its market capitalization to US$274 billion.
"This is irrational exuberance," Royal Bank of Scotland chairman Howard John Davies said in an interview on Bloomberg TV on Thursday. "This is a very, very unusual market, that shows we're not in a normal two-way trading market."
Davies agreed with the brokerages' concerns that exchanges which are set to offer bitcoin futures and options have failed to get enough feedback from market participants on margin levels, trading limits, stress tests and clearing. Those warnings were laid out in an open letter via the Futures Industry Association on Wednesday.
