The plot thickened for bitcoin on Tuesday, as prices breached $12,000 for the first time ahead of the planned launch of BTC futures this weekend. With the gain, bitcoin has doubled in price since the Nov. 12 swing low.
Record-Setting Pace Continues
Investors have by now grown accustomed to headlines proclaiming new record highs for bitcoin. Tuesday was no exception, as prices crossed $12,000, according to Bitfinex. At press time, the exchange was transacting BTC/USD at a rate of $12,114.
Data gathered by Barchart shows BTC/USD at roughly $12,123, which represents a gain of 3% for the session.
Daily turnover BTC/USD eclipsed $7.6 billion, according to CoinMarketCap. Volumes have been growing steadily in recent weeks as prices continued to reach new peaks. Turnover on Tuesday was spread across multiple exchanges, with Bitfinex accounting for 8.5% of total volumes. South Korea’s Bithumb saw 7.6% of daily transactions. IOTA-BTC transactions initiated on Binance accounted for a similar amount.
At present values, bitcoin is capitalized at $205 billion. That represents roughly 57% of the total cryptocurrency market.
Pent-Up Institutional Demand
The CBOE Futures Exchange shocked the cryptocurrency community this week after it announced plans to begin offering bitcoin futures at 6:00 p.m. ET Sunday. In doing so, CBOE gives rival CME Group a run for its money as the latter was widely expected to be the first to initiate bitcoin futures.
“Given the unprecedented interest in bitcoin, it’s vital we provide clients the trading tools to help them express their views and hedge their exposure,” CBOE CEO Ed Tilly said in a statement.
Under CBOE, bitcoin futures will trade under the ticker “XBT.” They will also be free until the end of the year.
CME Group will launch its bitcoin trading platform Dec. 18. Meanwhile, Nasdaq is expected to enter the race sometime next year, perhaps as early as Q2.
Despite the euphoria surrounding crypto futures, it’s not entirely clear how the new derivatives will impact price action. In the current market environment, the only market participants that need to hedge are bitcoin investors and the miners creating new currency. In a derivatives market, there’s a lot more hedging at play given that the market is largely made up of bears or pessimists. According to some analysts, the new futures environment could make large holders of bitcoin especially vulnerable.
That being said, bitcoin investors have grown accustomed to volatility. Violent swings in price are routine for the cryptocurrency, which has still managed to push higher for most of the year.
Bitcoin’s acceleration has been a boon to the thousands of other cryptocurrencies on the market. At last check, there were 17 other cryptos valued at $1 billion or more. This includes two cryptos that recently forked from the original blockchain – bitcoin cash (BTC) and bitcoin gold (BTG).
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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