The crypto currency Bitcoin recovered to a price of almost $11,000 on Friday, climbing near to the all time high reached on Wednesday of $11,500. Interestingly this price movement dragged other crypto currencies up to near record prices. Amongst these movers was Litecoin which touched the $100 mark before falling back to around $95. Ethereum Classic also touched the $30 mark while Dash continued flirting with the $800 mark. A string of financial figures who criticised Bitcoin could have had an effect on the price slide which occurred Thursday but the market appears to have shrugged off this news.
Since November 1, within a one-month span, the bitcoin price demonstrated a staggering 42.8 percent increase, from $6,000 to $10,500. Analysts expected a major price correction to occur in the cryptocurrency market, given that the value of other leading cryptocurrencies such as Ethereum and Bitcoin Cash have increased substantially along with bitcoin.
Historically, the price of bitcoin tends to follow a trend in which it achieves a new all-time high, suffers a major correction, but rebounds to its previous all-time high and prepare for new rallies. A same trend has been demonstrated by the bitcoin price development over the past few days, given that bitcoin’s value surpassed $11,000, dropped to $8,800, and recovered to $10,500.
A major correction of the cryptocurrency market creates a healthy uptrend for most leading cryptocurrencies like bitcoin, as the market stabilizes and investors initiate a new rally. Hence, after the $8,800 dip, the bitcoin price is at a better and more stable position to sustain upward momentum and surge in the short-term.
Earlier today, the $51 billion financial institution CME Group, the world’s largest options exchange, has announced December 18 as the official launch date of its bitcoin futures exchange. In previous interviews, CME Group executives stated that the December 11 date was mistakenly leaked, and it was never the company’s intention to launch its bitcoin futures exchange by that date.
In an official press release published on December 1, CME Group reaffirmed that its US Commodities and Futures Trading Commission (CFTC)-regulated bitcoin futures exchange will launch on December 18.
“We are pleased to bring Bitcoin futures to market after working closely with the CFTC and market participants to design a regulated offering that will provide investors with transparency, price discovery, and risk transfer capabilities,” said Terry Duffy, CME Group Chairman and CEO.
The entrance of CME into the bitcoin market will lead to an increase of bitcoin’s liquidity as a widely recognized store of value and digital currency. Following CME’s bitcoin futures exchange launch, several large-scale hedge funds will commit to investing in bitcoin, including the $95 billion Man Group.
Billions of dollars will flow into the bitcoin market by the year’s end and consequently, it will likely create a domino effect across all major exchanges. Casual investors and traders will rush to invest in bitcoin, leading a short-term surge in the price of bitcoin.
It is likely that the price of bitcoin will sustain throughout the first half of 2018 as well, given that Cantor, Nasdaq, and other major financial institutions will also integrate bitcoin futures by early 2018.
Bitcoin against Gold
Bitcoin currently amounts for less than 3 percent of the global gold market. But, the value of gold has been on a decline over the five years, and the definition of a safe haven asset clearly depicts that safe haven assets either increase in value or remains stable. Hence, considering bitcoin’s transportability, fixed monetary supply, and decentralized structure, bitcoin is a better safe haven asset than gold.
As more institutional investors enter the bitcoin market, investors from the gold market will likely migrate to the cryptocurrency market alongside hedge funds, investment banks, and retail traders.
The bitcoin price rallied to a 24-hour high following the announcement that U.S. derivatives exchange CME has self-certified to list bitcoin futures contracts in mid-December.
As CCN reported, CME announced on Friday that, pending final regulatory approval, the exchange will launch its much-anticipated bitcoin futures product on Monday, Dec. 18. Though CME had signaled its intent to launch these products before the end of the year, many people doubted the U.S. Commodity Futures Trading Commission (CFTC) would grant their application within this time period.
The bitcoin price surged in response to the news, rising to a daily high of $10,760 on bitcoin exchange Bitfinex. This represented a nearly $2,000 recovery from yesterday’s low, which saw the bitcoin price fall as far as $8,801. At the time of writing, the bitcoin price was trading at $10,452 on Bitfinex, representing a 24-hour increase of approximately 14 percent.
The advent of bitcoin futures and other exchange-traded derivatives products is widely-expected to hasten the mainstream adoption of cryptocurrency as a financial instrument. Pantera Capital CEO Dan Morehead has gone as far as to say that he anticipates that bitcoin will soon become a “rational, expected” component of a diversified financial portfolio.
Some institutional investors — most notably Thomas Peterffy of Interactive Brokers — have criticized bitcoin derivatives products and expressed concern that they will destabilize the the markets. However, CME CEO Terry Duffy has argued that those fears are overblown, noting that the exchange has rules in place to prevent that from happening.
Despite reservations from some investors, U.S. exchanges have been rushing to add bitcoin futures to their product lines. Earlier this week, a Wall Street Journal report stated that NASDAQ Inc. plans to launch a bitcoin contract on its futures exchange during the first half of 2018. In a separate announcement on Friday, fellow Chicago-based market CBOE revealed that it has filed product certification with the CFTC as a precursor to launch its own bitcoin futures product under the ticker symbol XBT. Neither NASDAQ nor CBOE’s futures have an official target launch date, however.