Bitcoin‘s meteoric price rise has stunned critics and enthusiasts alike, leaving investors scrambling to understand the fundamental reason for the digital currency’s runaway rally.
Valentin Marinov, head of G-10 FX research at Credit Agricole CIB, told CNBC on Monday that he was hopeful he now understood the reason behind bitcoin’s soaring value.
He predicted further gains for the cryptocurrency before the end of the year.
Bitcoin was changing hands about 10.7 percent higher Monday morning at above $16,642.45, according to CoinDesk’s Bitcoin Price Index. The index tracks prices from digital currency exchanges Bitstamp, Coinbase, itBit and Bitfinex.
When asked to explain the driving force behind bitcoin’s unprecedented rally, Marinov said: “It is the inherent imbalance between demand and supply. Supply is inherently fixed; it’s very much like gold if you wish? At the same time… demand is based on hopes that its value will continue to grow.”
Marinov also pointed to an unwavering hope among investors that the digital currency’s value appears to be “unlimited”.