All the day’s economic and financial news, as cryptocurrencies recover from last week’s wobble

Bitcoin rebounds from pre-Christmas wobble

Israel plans clampdown over ‘bubble’ fears

Analyst: How do you value bitcoin?

 

As predicted, European stock markets are rather quiet after the Christmas break.In London, the FTSE 100 is up a modest four points (perhaps traders are being distracted by the snowflakes that are now sweeping through the capital).Mining companies are leading the risers; Rio Tinto, Glencore, BHP Billiton and Anglo American have all gained around 1.5% while silver producer Fresnillo is up 2%.

 Bitcoin’s stumble last week came after two exchanges, CME and Cboe, both launched futures markets allowing investors to bet against the cryptocurrency.

 After crashing by more than $8,000 from an all-time high, Bitcoin is up 3.5% at the time of writing. Although the recent plunge frightened many bitcoin fans, when looking at the relatively short history of bitcoin trading, the price action seems just normal. During 2017 the cryptocurrency crashed by 30% or more six times. Every fall was followed by huge price appreciation until it peaked on 17 December.Whether the Bitcoin bull market is close to an end or just pausing for a short break, remains to be a wild question for 2018. I still believe that Bitcoin is in a bubble formation. However, there’s no effective test to measure at which stage we are currently standing.For example, equity prices may be said in a bubble territory if investors are willing to pay much more for a stock than the intrinsic value which is justified by the discounted divided stream. Similarly, econometric tests may be run on bonds, commodities, currencies or any other asset to come up with a justified value. For Bitcoin, there isn’t any fundamental basis to justify the price.