- Bitcoin (BTCUSD on xStation5) storms higher on expectations that a launch of Bitcoin futures may incentivize more institutions to invest, other digital currencies lag behind
- BTC futures could make shorts much easier being a source of risks for the price
- Along with the surging Bitcoin price central banks of China and India warns investors against betting on cryptocurrencies
Since the beginning of December Bitcoin has already gained over $2,500 being mostly fueled by expectations that a launch of Bitcoin futures by CBOE and CME thereafter could increase institutional demand for the digital currency due to higher credibility to the cryptocurrency. Just 6 days have been sufficient to see the Bitcoin price crossing a stunning $12,000 and one may assume that hasn’t been the end, however massive pullbacks have to be taken into account as usual. Notice that each rapid surge led to a larger correction in the past, hence there is a likelihood that the history could repeat itself causing a Bitcoin’s plunge coming out of nowhere. Finally it’s worth highlighting that the Bitcoin’s outperformance could be led solely by the above-mentioned reason as its major peers have lagged behind of late.
Although conventional wisdom seems to herald that Bitcoin could be offered a boost when CBOE and CME launch their BTC futures, there is also a risk that everybody who has already dubbed Bitcoin a bubble might put their money to start shorting the digital currency. Bear in mind that Bitcoin futures will do more to make shorts easier rather than longs, hence here is a source of risks. For that reason caution appears to be especially warranted during the upcoming week because the Bitcoin price could be susceptible to more chaotic moves compared to those to which most of traders have already accustomed.
While Bitcoin is storming higher its major peers are treading water or declining to some extent. Looking for any buying opportunities it’s worth paying attention to Ethereum (ETHUSD) as it’s approaching its crucial support zone placed at around $445.
Ethereum (ETHUSD) is sliding a bit despite a hefty increase seen in Bitcoin. The price of the second largest cryptocurrency in terms of market capitalization is nearing a notable support area which has already served as a turning point several times. Once this scenario repeats this time round, it could bring about a pick-up toward $500. On the other hand, if Ethereum’s appeal erodes further sellers could take a stab at taking the price as low as $400. Source: xStation5
Moving on, the central bank of China warned investors over the weekend against investing cryptocurrencies using harsh remarks comparing Bitcoin to a dead body thereby enhancing its opinion that Bitcoin would die ultimately. Moreover, the PBoC’s deputy governor was quoted saying "if we had not shut down Bitcoin exchanges and cracked down on ICOs several months ago, if China still accounted for more than 80% of the world’s Bitcoin trading and ICO fundraising, what would happen today? Thinking of this question makes me scared." The Reserve Bank of India chose to weigh in on this topic as well being yet more straightforward. The bank said in its statement that if India had to ban virtual currencies, they would have done it by now. In the last three years, the RBI’s statement has been the same: they are uncomfortable with it and people should invest at their own risk.
This article is provided for general information purposes only. Any opinions, analyses, prices or other content is provided for educational purposes and does not constitute investment advice or a recommendation. Any research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Any information provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.
Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk, we do not accept liability for any loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.