'Bitcoin mania' may be coming to an end, SUNY Cortland professor says

NEW YORK, N.Y. - The online currency known as Bitcoin reached an all-time high in its valuation Tuesday morning, trading at just over $10,000.

Created in 2009 by an unknown person or persons under the name Satoshi Nakamoto, Bitcoin is a decentralized global payments system that functions as a form of currency without an administrator. It gained popularity following the 2008 stock market crash.

Sebastian Purcell, an assistant professor of philosophy at SUNY Cortland who writes about cryptocurrencies for Seeking Alpha, says the futures market points to the end of "bitcoin mania."

"The digital gold rush of Bitcoin may be coming to an end," Purcell wrote. "Two implications follow for Bitcoin. The first is that Bitcoin, far from replacing existing fiat currencies, is becoming more dependent on them. Just as oil is indexed to the dollar, so too is Bitcoin. The result is to strengthen rather than to weaken the value of the dollar for the cryptocurrency world."

Purcell says those looking to make big returns by investing in Bitcoin should proceed with caution.

"Bitcoin is thus moving into its mature phase. Bitcoin futures provide reasons to think that financial institutions will be buying Bitcoin. Paradoxically, while this means that orders of magnitude more money are likely to enter the cryptocurrency space, especially into Bitcoin itself, the percent return will not be as great as has been witnessed previously."

Many financial experts believe the Bitcoin bubble will pop, leading to market crashes. Former hedge fund manager Mike Novogratz predicts that one Bitcoin will be valued at $40,000 by the end of 2018.

While that may seem unrealistic, Novogratz correctly predicted that Bitcoin would cross the $10,000 mark by the end of 2017.