Bitcoin

New York Fed President Not Feeling The Bitcoin Giddiness

Bitcoin may be trading close to $10,000 after starting the year around $1,000, but Federal Reserve Bank of New York President William Dudley isn’t sharing in the giddiness.

According to news from Bloomberg, when asked about bitcoin and cryptocurrency on Wednesday (Nov. 29), Dudley gave a warning: “In terms of bitcoin, I would be pretty cautionary about it. I think that it’s not a stable store of value. I would be, at this point, pretty skeptical of bitcoin. I think it’s really more of a speculative activity.”

The Federal Reserve president noted that bitcoin is still operating in a niche market and that it is “tiny” compared to the amount of payment transactions that transpire on a daily basis in the U.S. “I think at this point it’s really very premature to be talking about the Federal Reserve offering digital currencies, but it is something we are starting to think about,” he admitted.

The cryptocurrency comments came as the stock price of bitcoin made it up above $9,500 on Monday for the first time, which means the price of bitcoin is up 900 percent in 2017 — an acceleration that has picked up in the last month. And the price of bitcoin kept right on going past $9,500. As of mid-morning in New York on Monday (Nov. 27), bitcoin rose as high as $9,732.

Bitcoin broke the $9,000 milestone over the weekend — just about a week after it hit its previous high-water mark of $8,000, which is the fastest $1,000 jump in bitcoin value in its brief history. The digital currency took eight days to go from $3,000 to $4,000 and needed nine days to go from $5,000 to $6,000 in stock price.

“Bitcoin has seen another frenzy of buying, as the fear-of-missing-out trade bites even harder,” Chris Weston, chief market strategist at IG Group, wrote to clients on Monday, saying that “mad momentum” is driving the price higher. Coinbase alone, he noted, has added about 100,000 accounts last week from Wednesday to Friday, bringing its total to 13.1 million. Charles Schwab, as a point of comparison, had 10.6 million active brokerage accounts as of October.

However, while Coinbase now has more accounts, Schwab accounts hold about $3.3 trillion in client assets, which is a lot more than is collectively being held in Coinbase accounts.

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Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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