Bitcoin’s Smaller Cousins Are Leading the Crypto Rally

Bitcoin's Smaller Cousins Are Leading the Crypto Rally

Bitcoin’s Smaller Cousins Are Leading the Crypto Rally

Bitcoin’s smaller cousins are outpacing the largest cryptocurrency’s gains since major U.S. exchanges started offering futures.

The biggest gainers among digital assets with at least $1 billion of market capitalization in the past seven days are so-called alternative coins Verge, Tron, Qtum and Cardano, soaring at least 300 percent. Despite some wild price swings, bitcoin’s price is mostly flat since Cboe Group Markets Inc. and CME Group Inc. made the derivatives available in the past two weeks.

“People were really excited about the futures coming in and bitcoin really rallied leading up to that,” Joe Van Hecke, managing partner at Chicago-based Grace Hall Trading LLC, said in a telephone interview from Charlotte, North Carolina. “Bitcoin’s been on a massive rally and the other coins are just now catching up as it takes a breather. Additionally some positive press around some of them added to the rally. ”

Smaller Coins Have Bigger Gains

Bitcoin's smaller rivals are outpacing the largest cryptocurrency

smaller coins have bigger gains

Here’s a primer on these lesser known digital tokens. Most of them try to improve on the very things some see as positive in bitcoin; for those who don’t like to broadcast their transactions on a public blockchain, some platforms are offering untraceable transfers. And if you’re uneasy with the fact that bitcoin can’t be easily regulated, there’s a coin to fix that too. There’s even a blockchain-less cryptocurrency that tries to eliminate fees.

Verge

Verge aims to provide individuals and businesses with fast, efficient and decentralized transactions, which was bitcoin’s original purpose, but wants to improve on bitcoin by maintaining personal privacy, using anonymity-centric networks such as Tor, obfuscating IP addressees and making transactions "completely untraceable," according to its website. Verge, with a market cap of $1.07 billion, is up more than 1,000 percent in the past week.

Tron

Tron, operated by the Singapore-based Tron Foundation, wants to build a “worldwide free content entertainment system” based on the blockchain, according to its website. The protocol allows users to freely publish, store and own data, enabling them to decide how the content gets distributed and at what cost. Payments would be made in cryptocurrencies including tron’s coin. Tron, with a market cap of $3.1 billion, is up 340 percent in the past week.

Qtum

Qtum wants to be the public ledger for business. The open-source blockchain project wants to combine the reliability of bitcoin’s blockchain with the flexibility of smart contracts of the ethereum network, according to its website. That combination will allow it to provide stability for business applications. Qtum Foundation, which develops the project, is based in Singapore. Qtum has a market cap of $5.1 billion and is up 262 percent in the past week.

Cardano

Cardano, backed by the Zug, Switzerland-based Cardano Foundation, is a decentralized public blockchain that aims to protect user privacy, while also allowing for regulation. Cardano is a multi-layer protocol; the settlement layer will have a unit of account, while the control layer will run smart contracts and will be programmed to recognize identity, assisting compliance, according to its website. The system is designed to be upgraded so that it can evolve quickly. Cardano has a market cap of $14 billion, and is up 348 percent in the past week.

Other cryptocurrencies making waves because of their longer-term price moves and new developments:

Monero

Monero is a decentralized cryptocurrency that focuses on privacy, hiding the origins, amounts, and destinations of all transactions. Monero on Dec. 5 announced that more than 35 artists, including Mariah Carey, Lana del Rey and Marilyn Manson, will start accepting the cryptocurrency on their online stores. Monero’s price has more than quadrupled to over $420 in the past two months.

Iota

Iota is a cryptocurrency backed by a distributed ledger that’s not on a blockchain. Instead the network is called a "tangle" and aims to eliminate fees by creating a decentralized peer-to-peer system. Iota’s tokens have been on a rollercoaster, rallying on a statement on its blog that seemed to imply a partnership with Microsoft Corp., and then plunging after the platform clarified it’s not in a formal agreement with the tech giant. Iota’s price has soared from less than a dollar a month ago to more than $5, climbing to become the sixth biggest cryptocurrency by market cap, right after litecoin.

Author Camila Russo 20 December 2017, 15:37 GMT

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Bitcoin Cash makes waves as it becomes available on Coinbase â and then halts trading

Bitcoin Cash makes waves as it becomes available on Coinbase – and then halts trading

Bitcoin Cash, a fork of the more popular cryptocurrency that was created in August, is now fully supported on Coinbase’s exchange, so you can buy and sell the currency there – just not immediately.

Abbreviated as BCH, the currency showed Cash prices at roughly $8,500, or nearly three times higher than the value it commands on other exchanges (Coinmarketcap has it at $3,381 at the time of writing).

TechCrunch noted that the price surge was likely the result of a glitch, as no other exchange reflected a similar increase in value. Coinbase’s US-based sister exchange GDAX noted that it’s clearing BCH markets until 9AM PST on December 20. As such, Coinbase has halted BCH trading on its platform as well – though sends and receives are still possible.

The company noted that you should be able to buy and sell BCH again tomorrow, but didn’t say whether it determined what might have caused the hiccup.

Update: GDAX explained that it paused BCH trading owing to high volatility, and that order books will reopen on December 20 at 9AM PST.

Author ABHIMANYU GHOSHAL

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Watch out for a correction in bitcoin after a parabolic rise

Cryptocurrencies are suitable for short-term trading
Bitcoin futures have limits on expiry
The bitcoin trend shows room for a 50% correction

Bitcoin trading, and the capital allocated to it, remains a very small part of the multi-trillion dollar equity markets. It is an even smaller part of the much, much larger derivatives market.

The key problem with bitcoin and other cryptocurrencies is that they are fiat currencies in the true sense of the word. A fiat currency relies on investors confidence for its value. A fiat currency is not backed in gold or some other asset. Most world currencies are fiat currencies, but they are backed by sovereign states. It is rare for a sovereigns States to default on debt which in turn leads to currency collapse.

Cryptocurrencies are the currency of choice for money laundering, hackers, terrorists and criminals. Governments will not stand by and allow these cryptocurrencies to evade the regulations around these activities. There is a high risk that sovereign executive action will destroy the value of these bitcoins.

Legitimacy

Cryptocurrencies do not have the support of sovereign states. In fact some sovereign states – China – refuse to recognize these as legitimate currencies.

This is the most significant risk in cryptocurrency trading. At any time a sovereign state like the United States may ban or prohibit cryptocurrency use and trading and thus render all contracts immediately worthless. This makes the cryptocurrencies suitable for short-term trading with exceptionally good risk management.

The listing of bitcoin contracts on Chicago futures exchanges does not legitimize Bitcoin. These contracts can only be cash settled in U.S. dollars. The contract cannot be converted to bitcoins on expiry. This gives an indication of the level of confidence in the currency. Creating a bitcoin futures contract legitimizes and regulates the trading activity, but it does not legitimize bitcoin as a currency.

CME, the world's largest futures exchange, launched its bitcoin futures contract this week under the ticker "BTC." The front-month contact opened above $20,000. The previous week the Chicago Board Options Exchange launched it own futures contract with the front-month topping $18,000.

Cryptocurrencies are also tracked on CoinDesk, which monitors prices from digital currency exchanges Bitstamp, Coinbase, itBit and Bitfinex.

The trend

This trend is a parabolic curve. The trend is best described using a segment of an ellipse, mistakenly called a parabolic curve

Once the three anchor points are set, the position of the curve does not change. The trend starts off slowly then accelerates very rapidly until the activity on the price chart is almost vertical.

Prices will soon move inevitably to the right of the curve. This usually signals a rapid retracement of 50% or more.

History

Alexandre Dumas wrote a book, The Black Tulip, which should be read by any person thinking about trading bitcoins. If anything, the situation is worse now that Dumas describes in his day when tulip futures were actively traded on the Amsterdam stock exchange.

Bitcoins will not impact the stock market other than to remove some speculative capital from the equity market. However the amounts are small when compared with overall market activity.

Author Daryl Guppy CNBC

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Analyst who predicted bitcoin’s rise now sees it hitting $300,000-$400,000

Analyst who predicted bitcoins rise now sees it hitting $300,000-$400,000

Analyst who predicted bitcoin's rise now sees it hitting $300,000-$400,000

Ronnie Moas in July put a $5,000 price target on bitcoin when it was at $2,600
The founder of Standpoint Research now sees the cryptocurrency rising by another 500 percent

Bitcoin will surge past $20,000 and continue its meteoric march into six figures, according to independent research analyst Ronnie Moas.

"Bitcoin is already up 500 percent since I recommended it in the beginning of July, and I'm looking for another 500 percent move from here," said Moas, the founder of Standpoint Research, a self-described "one-man operation" based in Miami.

Over the summer, Moas put a $5,000 price target on bitcoin for 2018. At the time, the digital currency was trading at just $2,600. Since then, it has surged to $18,168 as of Monday, according to prices tracked on Coinbase.

"The end-game on bitcoin is that it will hit $300,000 to $400,000 in my opinion, and it will be the most valuable currency in the world," Moas told CNBC's "The Rundown."

"I don't know how much gold there is in the ground, but I know how much bitcoin there is, and in two years there will be 300 million people in the world trying to get their hands on a few million bitcoin."
-Ronnie Moas, founder, Standpoint Research

The analyst's comments came as the CME, the world's largest futures exchange, launched its own bitcoin futures contract. The Cboe did the same earlier this month.

His aggressively bullish call — a near-$380,000 dollar appreciation on today's prices — is based on the idea that since only 21 million bitcoin can ever exist. Increasing demand for the digital currency will naturally drive its price up, he said.

Not everyone agrees

Moas said he believes his price target is a conservative call, but others disagree.

"We think that it's risky," Vasu Menon, vice president of Wealth Management at Singapore-based bank OCBC, told CNBC.

"I don't see strong fundamental drivers for this bitcoin rally," he said.

But Moas says the party is just getting started.

"I look at bitcoin the same way I look at Amazon," he said. "The way to play Amazon for the last 15 years was to buy it, hold it, and add on the dips. That's exactly the way I think people should be playing bitcoin."

Author Dan Murphy Correspondent, CNBC

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Bitcoin Price Weekly Analysis â BTC/USD Upside Drift Above $20,000

Bitcoin Price Weekly Analysis – BTC/USD Upside Drift Above $20,000

Bitcoin price is surging higher towards $20,000 against the US Dollar. BTC/USD might soon break the $20k level and gain further traction in the near term.

Key Points

Bitcoin price is gaining pace once again and is currently trading above $18,000 against the US Dollar.

There is a monster bullish trend line forming with support at $17,000 on the 4-hours chart of BTC/USD (data feed from SimpleFX).

The pair is moving higher and it might soon break the $20,000 level for more gains in the near term.

Bitcoin price is surging higher towards $20,000 against the US Dollar. BTC/USD might soon break the $20k level and gain further traction in the near term.

Bitcoin Price Trend

There were nasty gains in bitcoin price above the $16,000 level against the US Dollar. After a major correction, the price found support above $15,000. Later, buyers gained momentum and were able to push the price above the $17,000 level. It opened the doors for more gains and the price was able to trade to a new all-time high above $19,000. The recent high was $19,426 and it seems like the current upside move is far from over.

During the upside move, the price was able to break a major connecting resistance trend line at $18,000 on the hourly chart. The current price action is positive above $17k and it seems like the price might continue to move higher. On the downside, an initial support is around the 23.6% Fib retracement level of the last wave from the $15,590 low to $19,426 high. Moreover, the broken trend line at $18K could act as a strong support in the near term.

Moreover, there is a monster bullish trend line forming with support at $17,000 on the 4-hours chart of BTC/USD. Therefore, the current trend is very positive and the pair might accelerate above $20K in the near term.

Looking at the technical indicators:

4-hours MACD – The MACD is gaining momentum in the bullish zone.

4-hours RSI (Relative Strength Index) – The RSI is reaching the overbought levels, but with no signs of a major correction.

Major Support Level – $17,000

Major Resistance Level – $20,000

Author: Aayush Jindal 6:00 am December 17, 2017

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Tax dept starts probe into Bitcoin exchanges to ascertain rate they can be taxed under

Tax Dept starts probe into Bitcoin exchanges to ascertain rate they can be taxed under.

The indirect tax department has launched an investigation into Bitcoin exchanges operating in India to ascertain at what rate they can be taxed under the goods and services tax (GST) regime, two people with direct knowledge of the matter said.

The development comes as the income tax department launched searches on top Bitcoin exchanges including Zebpay, Unocoin and CoinSecure on Wednesday.

According to the indirect tax officers, the investigations began probe about a month back and top executives and promoters of some Bitcoin exchanges were asked to explain their business model and how much indirect tax — either service tax or value-added tax — could be levied on the last financial year's revenue.

"There is ambiguity around how much sales tax is applicable on revenues of these startups as the product they deal in is not defined by the current tax laws," said a person with direct knowledge of the matter. "No satisfactory answer is yet provided by any of these Bitcoin startups."

A senior executive at one of the top seven Bitcoin exchanges in the country confirmed that both direct and indirect tax officials have been questioning the company about its business model and taxability. "While the indirect tax department has been calling senior executives since mid-November, the direct tax officials started reaching out to us two weeks back," the person said.

Bitcoin is the most popular among digital currencies that allow online payments directly from one person to another without any middlemen or going through any financial institution. With many businesses beginning to accept them, there is rising demand for such cryptocurrencies that come without any government control and allow anonymous transactions. More than that, Bitcoin has become a craze among investors, with its value skyrocketing more than 1,200% in 2017 alone. Price of one Bitcoin stood at $17,900, or .`11.46 lakh, on the Luxembourg-based Bitstamp exchange as on Friday evening.

Among other things the tax department wants to know if Bitcoins are currency, goods or services. Tax rates would depend on how the product is defined.

"Bitcoin may not qualify as currency or money as it is not a legal tender for Indian indirect tax laws," said Pratik Jain, national leader, indirect tax, PwC. "Therefore, VAT (value-added tax) or GST implications may arise. In case it is sold to overseas customers from India it may qualify as 'export'." However, if there is a commission or fee earned in the transaction, then the business of Bitcoin exchanges is likely to be viewed as a 'service', Jain said. "There are several grey areas which need to be investigated, in light of the precedence and guidance available under laws of other countries."

Industry insiders said that Bitcoin players, including Indian exchanges, earn their revenue through commission, transaction fees or price arbitrage. There was no response to queries sent to Zebpay and CoinSecure on Wednesday. Unocoin told ET: "Given that we have not received any notice, none of your questions are relevant."

No tax notices have been issued yet. That can happen only after an investigation is concluded and the exact tax applicable is determined.

One person close to the development said the indirect tax department is likely to issue demand orders to Bitcoin exchanges by the first quarter of next year. "The sales tax department and VAT authorities would be well within their rights to issue arbitrary demand orders (for 2016-17, before the implementation of GST)," the person said. GST was put in place on July 1.

According to another person in the know, VAT authorities from Gujarat, Maharashtra and Karnataka have separately initiated an inquiry to determine if Bitcoin exchanges are liable to the tax.

Tax experts said calculating indirect tax on the revenue earned by the Bitcoin startups is causing problems due to lack of clarity around the 'place of supply' provisions.

Income-tax authorities too are on the trail of the Indian Bitcoin sector. ET reported on Monday on an ambiguity in income tax to be paid by Bitcoin holders in India. According to people with direct knowledge of the matter, the income tax authorities wanted access to data on Indian Bitcoin holders and the gains they have made.

The stratospheric rise in Bitcoin valuation has prompted several investors and experts, including Warren Buffet and JP Morgan's Jamie Dimon, to warn that it is a bubble. The Reserve Bank of India (RBI) has so far issued three warnings against Bitcoins — the first in 2013, the second in February this year and the third last week.

There are 1,600 types of cryptocurrencies available across the globe based on blockchain technology. The more common ones include Bitcoin, Ethereum, Ripple, Litecoin and Dash.

"One needs to choose a cryptocurrency wallet and an exchange to trade on the currency," said Vishal Gupta, founder of SearchTrade, a search engine company that uses Bitcoins to pay users every time they search on the platform. "From there it is as simple as filling out a form and waiting for the transaction to process."

Gupta, who also cofounded the Digital Assets and Blockchain Foundation India (DABFI), however, declined to share how players (wallet or facilitators) earn their revenues.

Authors: Sachin Dave, Vishal Dutta ET Bureau|Dec 16, 2017, 09.43 AM IST

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Bitcoin buyers should be prepared to lose all their money, top UK regulator warns

Andrew Bailey, chief executive of the Financial Conduct Authority, told BBC's "Newsnight" on Thursday, "If you want to invest in bitcoin, be prepared to lose all your money"
Bitcoin's meteoric price rise has stunned critics and enthusiasts alike, leaving investors scrambling to understand the driving factors for the digital currency's runaway rally
Bitcoin traded at $17,159 on Friday morning, according to CoinDesk's bitcoin price index

Bitcoin buyers have been issued a "serious warning" from one of Britain's leading financial regulators.

Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), told BBC's "Newsnight" on Thursday, "If you want to invest in bitcoin, be prepared to lose all your money."

Bailey said a lack of backing from governments and central banks for the world's most popular digital currency was evidence that putting money into bictoin was not a secure investment. He also said buying bitcoin was akin to gambling because it had the same level of risk.

Bitcoin's meteoric price rise has stunned critics and enthusiasts alike, leaving investors scrambling to understand the driving factors for the digital currency's runaway rally.

Bitcoin traded at $17,159 on Friday morning, according to CoinDesk's bitcoin price index. The digital currency has a market value of approximately $291 billion — the largest among the cryptocurrencies. A year ago, one bitcoin was worth around $780.

"If you look at what has happened this year, I would caution people … We know relatively little about what informs the price of bitcoin," Bailey told the BBC.

Bitcoin's staying power

Soaring interest from institutional and retail investors has prompted global exchanges, such as the Cboe, to launch futures contracts. Meantime, CME Group is poised to a launch bitcoin futures contract on Sunday and a German stock exchange operator is reportedly considering whether to follow suit.

The launch of bitcoin futures contracts represents a significant step in the legitimization of cryptocurrencies, according to some market participants. Futures are derivatives, or financial instruments, that obligate a trader to either buy or sell an asset at a specified time and at a specified price.

Bitcoin bulls have frequently referenced the cryptocurrency's scarcity value as a primary reason for its staying power. Somewhat like gold, bitcoin supply grows at glacial and ever-decreasing fixed rates with only 21 million bitcoins set to be in existence.

But while the trading of bitcoin futures on two of the world's largest exchanges is expected to provide a layer of official oversight that had not previously existed, several leading voices have expressed skepticism.

JPMorgan Chase CEO Jamie Dimon called bitcoin a "fraud" that would eventually blow up, while billionaire investor Warren Buffett urged traders to "stay away from it," calling the rally a "mirage."

Author Sam Meredith – Digital Reporter, CNBC.com

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A bubble? We don’t even know how to value Bitcoin

A bubble We don't even know how to value Bitcoin

A bubble? We don’t even know how to value Bitcoin

Bitcoin is a “speculative mania” according to the governor of the Reserve Bank of Australia. But it’s not so easy to say that Bitcoin is a bubble – we don’t know how to value it.

Recent price rises (close to $18,000 in the past three months) may be too great and can’t continue. But the Bitcoin market is only just maturing as an investment and as a currency, and so it may still have room to grow.

A bubble is when the price of an asset diverges from its “fundamentals” – the aspects of an asset that investors use to value it. These could be the income that can be earned from a stock over time, a company’s cash flow, the state of a country’s economy, or even the rent from property.

But Bitcoin does not pay out profits (like shares) or rent (like property) and is not attached a national economy (like fiat currencies). This is part of the reason why it is hard to tell what the underlying value of Bitcoin is or should be.

In the search for fundamentals some have suggested we should look at the supply of Bitcoins in the market (which is regulated by the technology itself), the number of Bitcoin transactions through the market, or even the energy consumed by Bitcoin miners (the computers that validate transactions and are rewarded with Bitcoins).

Diverging from fundamentals

If we take a close look, we can see how the price of Bitcoin may be diverging from these fundamentals. For instance, it is becoming less profitable to be a miner, especially as the energy required increases. At some stage the cost may exceed the price of Bitcoin, making the network less worthwhile to both mine and invest.

Bitcoin may be the best known cryptocurrency but it is also losing marketshare to other cryptocurrencies, such as Ethereum and Litecoin. Bitcoin currently accounts for 59.4% of the total global cryptocurrency market but at the beginning of 2016 it was 91.3%. Many of these other cryptocurrencies have more functionality than Bitcoin (such as Ethereum’s ability to execute smart contracts), or are more efficient and use less energy (such as Litecoin).

Government policy, such as taxation or the establishment of national digital currencies, may also make it riskier or less worthwhile to mine, transact or hold the cryptocurrency. China’s ban on initial coin offerings earlier this year reduced the value of Bitcoin by 20% in 24 hours.

Without these fundamentals the price of Bitcoin largely reflects speculation. And there is some evidence that people are simply buying and holding Bitcoin in the hope it will keep rising in value (also known as greater fool investing). Certainly, the cap on the total number (21 million) of Bitcoins that can exist makes the currency inherently deflationary – the value of the currency relative to goods and services will keep increasing even without speculation and so there is a disincentive to spend it.

Bitcoin still has room to grow

Many big investors – including banks and hedge funds – have not yet entered into the market. The volatility and lack of regulation around Bitcoin are two reasons stopping these investors from jumping in.

There are new financial products being developed, such as futures contracts, that may reduce the risk of holding Bitcoin and allow these institutional investors to get in.

But Bitcoin futures contracts – where people can place bets on the future price of stocks or markets – may also work against the price of Bitcoin. Just like gamblers place bets on horse races rather than buying a horse, investors may simply buy and sell the futures contracts rather than Bitcoin itself (some contracts are even settled in cash, rather than Bitcoin). All of this could lead to less actual Bitcoin changing hands, leading to less demand.

Although the rush to invest is apparently encouraging some people to take out mortgages to buy Bitcoin, traditional banks won’t lend specifically for that purpose as the market is too volatile.

But it is not just on the finance side that the Bitcoin market is set to expand. More infrastructure to support Bitcoin in the broader economy is rolling out, which should spur demand.

Bitcoin ATMs are being installed in many countries, including Australia. Bitcoin lending is emerging on peer-to-peer platforms, and new and more regulated marketplaces are being created.

Many companies are accepting Bitcoin as payment. That means that even if the speculation dies down, Bitcoin can still be traded for some goods and services.

And finally, although the fundamentals of Bitcoin are still up for debate, when it comes to transaction volume through the network there appears to be a lot of room for growth.

It’s good to remember that people have been calling Bitcoin a bubble for a long time, even when the price was just US$35 in 2013.

In the end, this is uncharted territory. We don’t know how to value Bitcoin, or what will happen. Historical examples may or may not apply.

What we do know is that the technology behind most cryptocurrencies is enabling new models of value transfer through secure global consensus networks and that is causing excitement and nervousness. Investors should beware.

Author: Alicia (Lucy) Cameron and Kelly Trinh for the Conversation

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Bitcoin Bulls Face ‘Alt’ Competition in Push to $20k

Bitcoin Bulls Face 'Alt' Competition in Push to $20k

Bitcoin Bulls Face 'Alt' Competition in Push to $20

Bitcoin may still be in the hunt for $20,000, but the bulls need progress soon else a minor pullback could be in the offing.

As per CoinDesk's Bitcoin Price Index (BPI), the cryptocurrency is trading at $17,539, having appreciated 4.48 percent in the last 24 hours to a new all-time high.

But while that's a modest, even impressive gain, it's worth noting that alternative currencies like litecoin and ether have strengthened by even more impressive rallies.

On the day's trading, the cryptocurrencies, the second and fourth by market volume, have seen 71.8 percent and 30 percent gains, respectively. Coinbase's GDAX exchange and South Korea's Bithumb have emerged as the primary drivers.

All told, though the stellar performance of litecoin and ether could be indicative of their availability and appeal to new buyers. Hence, a minor correction in bitcoin (BTC) cannot be ruled out as other assets garner attention.

1-hour chart

Bitcoin Bulls Face 'Alt' Competition in Push to $20k

The above chart shows:

Bull flag breakout followed by a nice rising lows pattern as represented by the ascending trend line.
The relative strength index is above 50.00 (in the bullish territory) and is trending.
The 1-hour 50-MA is curled up in favor of the bulls.

View

BTC could cut through the resistance at $17,500 and make a move towards the $18,300-$18,500 level over the next 12-24 hours.

Overall, the cryptocurrency looks set to test the major psychological level of $20,000. As noted earlier today, only two end-of-day closes below the $14,000 would abort the bullish view on the charts.

Author: Omkar Godbole

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Bitcoin futures suggest breakneck rise in price to slow

NEW YORK/LONDON (Reuters) – Newly launched bitcoin futures on Monday suggested that traders expect the cryptocurrency’s blistering price gains to slow in the coming months, even as it blasted above $17,000 to a fresh record high in the spot market.

Chicago-based derivatives exchange Cboe Global Markets launched the futures late on Sunday, marking the first time investors could get exposure to the bitcoin market via a large, regulated exchange.

The one-month bitcoin contract <0#XBT:> opened at 6 p.m. local time (2300 GMT) on Sunday at $15,460. By late afternoon on Monday in New York, it was trading at $18,650, roughly 8 percent above bitcoin’s spot price of $16,900 on the Bitstamp exchange.

Bitcoin earlier hit a record high of $17,270.

Its steep gains and rapid rise have attracted investors around the world as well as intense scrutiny from government regulators, which is the very opposite of what its creators wanted when it first launched bitcoin more than eight years ago.

“The bitcoin founder should be horrified seeing it rise so quickly, as any serious focus on it and its recent explosive move higher will soon end its freedom,” said John Taylor Jr, president and founder of research firm Taylor Global Vision in New York.

Taylor believes that based on his charts, bitcoin has not yet peaked, but as soon as the “upmove ends, it will crash.”

Given bitcoin has almost tripled in value over the past month, and was up more than 15 percent on Monday alone, the futures pricing suggested investors see price increases moderating.

Bitcoin futures were already offered on some unregulated cryptocurrency exchanges outside the United States, but backers said the U.S. market debut would confer greater legitimacy on the volatile cryptocurrency and encourage its wider use.

The CME Group (CME.O) is expected to launch its futures contract on Dec. 17.

VOLATILITY CONCERNS

Although there are hopes that the futures will draw in new investors, most fund managers at larger asset managers and institutional investors said bitcoin remains too volatile and lacks the fundamentals that give other assets value.

“There’s no place for bitcoin in a multi-asset portfolio given the very high volatility,” said Robeco Chief Investment Officer Lukas Daalder.

The two-month contract was trading at $18,750, an 11 percent premium over the spot price, while the three-month contract was changing hands at $18,140, a roughly 12 percent premium.

While modest when compared with bitcoin’s 270 percent increase over the past three months and 230 percent rise in the last two months, those levels still indicated a lack of large “short” positions betting against bitcoin.

“Anyone, especially a professional trading outfit, would be crazy to actually short sell this bull market,” said Nick Spanos, founder of Bitcoin Center NYC. “But just because it doesn’t happen on day one doesn’t mean it won’t in the future.”

Bitcoin was up more than 1,600 percent so far in 2017, having started the year at less than $1,000.

‘MARCH TOWARDS LEGITIMIZATION’

As of early afternoon trading in New York, 3,951 one-month contracts had changed hands, meaning around $73.1 million had been notionally traded. That compares with daily trading volumes of more than $21.5 billion across all cryptocurrencies, according to trade website Coinmarketcap.

There had been speculation that the futures launch would trigger more gyrations in the market. But while volatile compared with traditional currencies or assets, the rise on Monday was relatively tame for bitcoin.

Bitcoin surged more than 40 percent in 48 hours last week, before tumbling 20 percent in the following 10 hours.

“(Bitcoin futures) will speed up the march towards legitimization of an asset class that only a few years ago many law enforcement agencies would have argued had limited legitimate reasons for people to use,” said Jo Torode, a financial crime lawyer at Ropes & Gray in London.

The futures are cash-settled contracts, allowing investors exposure without having to hold any of the cryptocurrency.

The futures are based on the auction price of bitcoin in U.S. dollars on the Gemini Exchange, which is owned and operated by virtual currency entrepreneurs and brothers Cameron and Tyler Winklevoss.

DRAMATIC GAINS

Bitcoin was set up in 2008 by an individual or group calling themselves Satoshi Nakamoto, and was the first digital currency to successfully use cryptography to keep transactions secure and hidden, making traditional financial regulation difficult if not impossible.

Central bankers and critics of the cryptocurrency have been ringing the alarm bells over its surge in price and other risks such as whether the opaque market can be used for money laundering.

“It looks remarkably like a bubble forming to me,” the Reserve Bank of New Zealand’s Acting Governor Grant Spencer said on Sunday.

Somebody who invested $1,000 in bitcoin at the start of 2013 would now be sitting on around $1.2 million.

Heightened excitement ahead of the launch of the Cboe futures gave an extra kick to the cryptocurrency’s scorching run this year.

The launch has so far received a mixed reception from big U.S. banks and brokerages.

Several online brokerages, including Charles Schwab Corp (SCHW.N) and TD Ameritrade Holding Corp (AMTD.O), did not allow trading of the new futures immediately.

The Financial Times reported on Friday that JPMorgan Chase & Co (JPM.N) and Citigroup Inc (C.N) would not immediately clear bitcoin trades for clients.

Goldman Sachs Group Inc (GS.N) said on Thursday it was planning to clear such trades for certain clients.

Additional reporting by Chuck Mikolajczak and John McCrank in NEW YORK; Michelle Chen in HONG KONG and Helen Reid in LONDON; Graphics by Ritvik Carvalho in LONDON and Reuters Graphics team; Editing by Meredith Mazzilli

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

David Ogden – Http://markethive.com/david-ogden