5 min read

The bitcoin fad could pose a huge risk to investors due to markets' failure to adjust prices despite the cryptocurrency's growing success, Deutsche Bank economist Torsten Slok warned

 

Bitcoin made its debut on major exchanges on December 10 trading for $15,000 (£11,200) per unit.

 

But the Deutsche Bank chief international economist warned investors that Bitcoin could become a major risk to markets in 2018.

 

Mr Slok said: "The worry, of course, that one can have is that it's catching on quite substantially.

 

"Of course, with the speed with which prices are going up, then you do wonder where prices will be even by the end of 2017. But we do think that in 2018, this, of course, will continue to be a topic."

 

The economist sent a note to clients highlighting significant risks to international markets which included a crash in the price of bitcoin in the coming year.

 

Prior to the launch, critics had warned prospective buyers about the extreme volatility of the unregulated currency alongside issues surrounding hacking and money laundering that could cause problems for mainstream exchanges.

 

Speaking to CNBC, Mr Slok continued: "It is something that I think financial markets so far have been discounting as a small issue.

 

"But we do worry it could become more systemic especially if the current trends do continue."

 

Bitcoin has boasted a gravity-defying 15-fold gain since the start of the year, attracting institutional interest and no small amount of question marks.

 

Currency market investors were cautious ahead of a big week for policy meetings globally, with the Federal Reserve the only major central bank expected to raise interest rates. The Bank of England and the European Central Bank are likely to hold rates steady.

 

In the opening minutes of trading on Chicago Board Options Exchange (CBOE) Bitcoin increased in value by $1,170 (£873.41) as the price of a single bitcoin spiked by 10 per cent.

 

The rush to buy caused the CBOE website to crash less than ten minutes after the cryptocurrency first started trading.

 

On Twitter, the US exchange said: “Due to heavy traffic on our website, visitors to cboe.com may find that it is performing slower than usual and may at times be temporarily unavailable. All trading systems are operating normally.”