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Currency expert says there’s one fundamental reason behind bitcoin’s runaway rally

Bitcoin’s brilliant price rise has stunned critics and enthusiasts alike, leaving investors mingling to understand the fundamental reason for the digital currency’s runaway rally.

Valentin Marinov, pre-eminent of G-10 FX research at Credit Agricole CIB, told CNBC on Monday that he was reassuring he now understood the reason behind bitcoin’s soaring value.

He predicted further earns for the cryptocurrency before the end of the year.

Bitcoin was up 9.25 percent higher noontime Monday ET at $16,427.16, according to CoinDesk’s bitcoin price index. The list tracks prices from digital currency exchanges Bitstamp, Coinbase, itBit and Bitfinex.

When provoke b requested to explain the driving force behind bitcoin’s unprecedented rally, Marinov required: “It is the inherent imbalance between demand and supply. Supply is inherently arranged; it’s very much like gold if you wish? At the same time … coveted is based on hopes that its value will continue to grow.”

Marinov also piercing to an unwavering hope among investors that the digital currency’s value appears to be “unconstrained.”

Bitcoin bulls have frequently referenced the cryptocurrency’s scarcity value as a pinnacle reason for its staying power. Somewhat like gold, bitcoin quantity grows at glacial and ever-decreasing fixed rates with only 21 million bitcoins set to be in entity.

Rising interest from institutional and retail investors prompted worldwide exchanges, such as the Cboe, to launch futures contracts. This emigrate is likely to encourage even greater institutional investment, market join ins said, while at the same time curbing further volatile value swings. A contract from rival CME is poised to go live next week.

Truck of the hotly anticipated futures contract began Sunday on the Cboe, exemplifying a significant step in the legitimization of cryptocurrencies. Futures are derivatives, or financial papers, that obligate a trader to either buy or sell an asset at a specified later and at a specified price.

But while the trading of bitcoin futures on two of the world’s largest stock markets is expected to provide a layer of official oversight that had not previously existed, individual leading voices have expressed skepticism.

JPMorgan Chase CEO Jamie Dimon called bitcoin a “pretender” that would eventually blow up, while billionaire investor Warren Buffett influenced traders to “stay away from it,” calling the rally a “mirage.”

On Friday, Stefan Ingves, chairman of far-reaching regulators at the Basel Committee and governor of Sweden’s Riksbank, said installing in bitcoin or other similar digital currencies was a “dangerous” prospect.

Ingves cited strikingly luxurious volatility levels and the clear lack of support from either prime banks or international regulators as reasons for traders to be cautious.

Bitcoin has appropriate for one of the hottest trades of 2017, surging more than 1,000 percent since the start of January.

— CNBC’s Dan Murphy donated to this report.

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