Bitcoin added an astounding $1200 in its price in a matter of just 12 hours before shooting away to a value foo over $1500 in what is its first instance of touching that number. The incident happened on Thursday.
Since the beginning of this year, there has been a more than fifteenfold rise in the value of bitcoin which is also the best-known and biggest cryptocurrency of the world.
The cryptocurrency had traded above $1300 at the Luxembourg-based Bitstamp exchange for about 12 hours before it shot up to a value as high as $15,344 at around 1420 GMT on the exchange.
There are expectations that bitcoin would be able to attract more investors to the market following the launch of the cryptocurrency futures by CBOE earlier this weekend which was partly responsible for the sudden rise in its price. The CBOE is one of the world’s biggest derivatives exchanges.
“Futures trading will mean more demand…and is a form of ratification of the underlying tech – bitcoin and cryptocurrencies in general. They are now on the main stage,” said Charles Hayter, founder of cryptocurrency data analysis firm Cryptocompare.
However here there could be even greater vulnerability for the bitcoin due to the launch of the cryptocurrency futures from such a large exchange. This launch allows investors to make speculative “short” positions on bitcoin as well as “long” positions and such strategies result in unsteadiness in any commodity.
“Aggressive traders, such as hedge funds and algorithm-driven funds, (will be able) to use this futures market to enter bitcoin trading with high levels of liquidity for aggressive short-selling and knock the prices really low,” said Think Markets analyst Naeem Aslam.
“Players now have an incentive to be on the short side and make profits hedging against the upside.”
According to Coinmarketcap, a trade website, more than $260 billion is the total market cap pf bitcoin following the recent surge in its prices. Bitcocion’s market cap is calculated by multiplying the value of one coin with the total number of bitcoins that are in circulation currently.
According to Coinmarketcap, around $415 billion is the combined total valuation of all of the cryptocurrencies at present.
It was the quarter at the end of 2103 that bitcoin had seen it highest surge in price when it had crossed the $1000 mark for the first time and this quarter appears to be the best for the cryptocurrency since 2013 as its value had increased by more than three times since the start of October this year.
There had bene a huge slump in its value in 2014 following the revelation of hacking and stealing of 650,000 bitcoins from the Mt Gox, then the world’s biggest bitcoin exchange, after which the exchange had collapsed.
(Adapted from Reuters)