It seems like 2017 has become the year of Bitcoin
It started the year worth less than $1,000 but has soared above $17,000. Back in 2011, it was worth less than a dollar. It is being bought and sold by investors in a frenzy, driving the price higher and higher.
Some leading economists and financiers are calling bitcoin a bubble and a fraud, but industry insiders say they think it’s only going to get bigger as it gains more widespread acceptance.
With a total value of around $270 billion, the bitcoin market is small compared with more established assets.
Just after hitting a new record of more than $17,000, the digital currency plummeted Friday, 8th of December. Its price nosedived more than $3,000, swinging wildly between a high of $17,154 and a low of $13,964, according to tracking site CoinDesk.
One factor driving bitcoin’s price higher and higher in recent weeks is the expectation that big financial players like hedge funds and asset managers are set to wade into the market. That’s been supported by established exchanges in the U.S. saying they’re planning to let investors trade bitcoin futures soon.
Its price has taken off this year as mainstream investors have become more interested.
National governments are trying to keep up, puzzling over how to regulate bitcoin and other so-called cryptocurrencies. Countries like China and Venezuela have expressed interested in creating their own digital forms of money.
In the last 12 months, bitcoin has now gained around 2,000%. It’s gone from $11,000 to over $15,000 this week alone, amid signs that retail investors are piling in.
CME Group, the largest derivatives exchange in the world, as well as one of the oldest, will launch bitcoin futures trading on Dec. 18th, while CBOE Global Markets, which owns the Chicago Board Options Exchange (the largest U.S. options exchange) and BATS Global Markets, plans to beat CME to the punch by opening its own trading on Dec. 10th.
In theory, this opens the doors to institutional and retail investors who want exposure to bitcoin but for some reason (internal rules, or an aversion to risky and complex exchanges and wallets) can’t trade actual bitcoin.
And that expected flood of interest is part of the reason that bitcoin’s price recently shot past $11,000 (which, considering it started the year at $1,000, is phenomenal) according to Coindesk.
As for bitcoin futures, they could make the digital asset more useful by allowing users and intermediaries to hedge their foreign-exchange risks. That could increase the cryptocurrency’s adoption by merchants who want to accept bitcoin payments but are wary of its volatile value. Institutional investors are also used to trading regulated futures, which aren’t plagued by money-laundering worries.
What’s next? Investors were given a reminder of bitcoin’s unpredictability in November. After topping $11,000, it plunged more than $2,000 before resuming its ascent.
For further information: CoinDesk