What does the bitcoin futures contract mean for BTC/USD price in 2018?
Guest analysis by Cameron Bowen of Coinlist.me.
The start of 2017 saw bitcoin floating around the $1,000 level, as we close in on the end of the year, we have seen this market grow over 1700%. The $20,000 handle appears to be the next psychological number people will talk about, however given how bitcoin reacted at $10,000, it wouldn’t be wrong to expect it to fly straight through.
The word ‘bubble’ has been batted around for months now and it is not surprising considering the growth bitcoin has seen. If you were to compare it with other ‘bubbles’, such as the housing bubble, nothing has grown at the rate nor in the time period that bitcoin has.
Gold increased over 500% in its ‘bubble’ between 2001-11, however that was over a ten-year span. The dot-com ‘bubble’ grew by a similar amount in half the time, only to see the Nasdaq composite collapse fairly spectacularly the next year.
Comparing bitcoin to these other markets is difficult because bitcoin and cryptocurrencies are an embryonic asset whereas gold, technology and houses have been around forever.
What is the driver behind this recent bitcoin momentum?
November was a huge month for bitcoin, and the trigger month that kicked off this extreme growth. The announcement that the CME and CBOE were to launch a bitcoin futures contract turned, what was already an excitable market, into a steam engine market.
Having these exchanges offer bitcoin allows institutional investors to participate in the market. This news alone increased consumer confidence and saw momentum catapult upwards.
What a bitcoin futures contract could mean
With the CBOE having launched their bitcoin futures contract and the CME to launch theirs on 18 December we look at how this could affect the market moving into 2018.
The launch signals yet further acceptance of bitcoin as a genuine store of value and paves the way for large investors to speculate on bitcoins price.
Given the reaction we have seen, these investors are looking to fuel the rally, but can this momentum be sustained?