Fed chair calls bitcoin 'highly speculative'

Bitcoin futures begin trading
Bitcoin futures begin trading

Bitcoin's wild rally has enraptured investors in recent weeks. But the chair of the Federal Reserve isn't buying into the hype.

Janet Yellen on Wednesday called the cryptocurrency a "highly speculative asset."

"It is not a stable source of value, and it doesn't constitute legal tender," she told reporters at her last press conference as leader of the central bank.

Unstable might be an understatement. Bitcoin started the year below $1,000, hit $8,000 for the first time in early November, and then topped $17,000 on some exchanges last week. The currency's value has fluctuated by thousands of dollars in less than a day.

One bitcoin was worth about $16,200 on Wednesday, according to CoinDesk, which values bitcoin based on data from four exchanges.

Related: Looking to sell bitcoin? It's complicated

Yellen said she thinks it's important for the Fed to understand what she called "emerging risks to financial stability." But she called the risks posted by bitcoin "limited," and she said it plays only a "small role" in the nation's payment system.

"Undoubtedly there are individuals who could lose a lot of money if bitcoin were to fall in price," she said, "but I really don't see that as creating a full-blown financial stability risk."

Related: Federal Reserve, buoyed by stronger economy, lifts rates again

Bitcoin debuted on the Chicago Board Options Exchange last Sunday, and futures will begin trading on the Chicago Mercantile Exchange on December 17-18. That means investors can place bet on whether it will rise or fall in coming months.

The Nasdaq will debut the option next year.

--CNNMoney's Daniel Shane and Jackie Wattles contributed to this story.

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