The major crypto currencies such as Ethereum, Ripple, Litecoin and Bitcoin Cash saw incredible gains yesterday and early this morning reaching highs of around 15-20% in some cases, particularly with Bitcoin Cash. Ripple had a particularly good day and was trading at an all-time high of $0.82 and was already up by around 5% this morning indicating another day of major gains. However the spectacular star performer of the day was Ethereum Classic which rose by almost 20% to reach a high of $42 and it shows no signs of stopping. Similarly Bitcoin Cash rose by 15-20% registering highs of $2,400 at some points. Litecoin also performed a stromg recovery and is touching the $360-370 mark with $400 in sight. Conversely the major crypto currency Bitcoin had a rather flat day after flirting with the $20,000 mark, it settled to around $19,200 but all signs point to another of thos massive rallies where the price could go up very fast.
The cryptocurrency market cap surpassed $600 billion over the weekend, launching the combined value of all cryptocurrencies past that of e-commerce behemoth Amazon.
Cryptocurrency Market Cap Hits $600 Billion
The introduction of bitcoin futures contracts on regulated U.S. exchanges CBOE and CME has, as expected, facilitated a comprehensive market rally, even as the futures products have been thinly-traded relative to the global cryptocurrency ecosystem.
Last week, the cryptocurrency market cap rose to $440 billion after CBOE launched the first regulated bitcoin futures. That represented a seven-day gain of $100 billion — an astonishing feat — but the rapidity of this week’s rally has been even more meteoric.
Since last Monday, the cryptocurrency market cap has soared by $160 billion, or 36 percent, to reach a new all-time high just above $600 billion.
Although bitcoin led the rally for much of the week, it was altcoins that carried the cryptocurrency market cap across the historic threshold. As of Monday morning, there were 29 cryptocurrencies with individual market caps exceeding $1 billion; on January 1, there was one.
Cryptocurrencies More Valuable Than Amazon
At its present level, the cryptocurrency ecosystem is more valuable than Amazon. Like cryptocurrencies, the $568 billion tech giant has experienced a remarkable year-to-date rally, although its 60 percent advance has been eclipsed by the 3,400 percent explosion boasted by the cryptocurrency market cap.
While cryptocurrency — and bitcoin in particular — still represents a very small percentage of the global money supply, its economic status is rapidly swelling. Bitcoin is currently the world’s 14th most-valuable liquid currency, as measured by notes in circulation and bank deposits, and cryptocurrencies as a whole would rank 11th.
If the bull market continues, it would not be at all surprising if the cryptocurrency ecosystem hits the $1 trillion mark before Apple, whose $893 billion market cap makes it the world’s most valuable company, can accomplish the same feat.
CME Group, the world’s second-largest options exchange behind Cboe with a market cap of $51.4 billion, has officially listed bitcoin futures contracts on its trading platform earlier today, on December 18.
Bitcoin Reference Rate (BRR) on the CME bitcoin futures exchange, which aggregates the trade flow of major bitcoin spot exchanges during a specific calculation window into a once-a-day reference rate of the U.S. dollar price of bitcoin, is at $19,448. That is a $500 premium on the global average bitcoin price at $18,924.
Camila Russo, Bloomberg markets reporter, revealed that CME bitcoin futures recorded around $35 million in trades on its debut, processing more than 370 contracts.
Cboe, despite being the larger options exchange, processed just over 1,000 contracts on Friday, after its listing of bitcoin futures on December 14, Thursday. Since 1 CME contract is equivalent to 5 bitcoin while 1 CBOE contract represents the holding of 1 bitcoin, CME processed 45 percent more traders on its debut than Cboe.
Tens of Billions in Institutional Money Will be Invested in Bitcoin
As of current, Cboe and CME are processing around $60 to $70 million in bitcoin trades on a daily basis. In contrast, the global bitcoin exchange market is processing more than $13 billion per day. Cboe and CME only account for a small fraction of global bitcoin trading and investment.
However, the bitcoin futures market is crucial for the mid to long-term growth trend of bitcoin because it opens the bitcoin market to a group of investors that previously could not access the global bitcoin exchange market. Institutional investors, retail traders, hedge funds, and investment banks are now able to invest in bitcoin through bitcoin futures.
“Over 100 hedge funds have been created in the past year exclusively to trade digital currency. An even greater number of traditional institutional investors are starting to look at trading digital assets (including family offices, sovereign wealth funds, traditional hedge funds, and more). By some estimates there is $10B of institutional money waiting on the sidelines to invest in digital currency today,” said Coinbase CEO Brian Armstrong.
More importantly, various studies have revealed that the global offshore banking market is valued at over $40 trillion. Most offshore bank account holders rely on centralized financial service providers such as Goldman Sachs and JPMorgan to process trades, transactions, and store wealth.
Upon the debut of CME’s bitcoin futures contracts, sources of both Goldman Sachs and JPMorgan disclosed that the two banks will begin clearing bitcoin futures on behalf of their clients. In addition to the $10 billion from investment firms and hedge funds, a significantly larger amount of capital will be reallocated from offshore banking accounts to the bitcoin market in the next few years.
After observing the mid-term success and performance of Cboe and CME, Nasdaq, the world’s second-largest stock market behind the New York Stock Exchange (NYSE) will introduce bitcoin futures in the first quarter of 2018.
NYSE has also expressed its optimism towards bitcoin futures and announced its intent to list bitcoin futures in the upcoming months.