Bitcoin Past $14,000
It used to take bitcoin months to go up $1000. Now it’s taking hours. Just as everyone was getting used to the price hitting $13,000, it went above $14,000. Yesterday’s $2,500 gain was the biggest single day rise the currency has ever seen.
Various explanations have been put forward to explain the move. Coinbase’s GDAX exchange has been driving business in the US, with buyers there paying a $500 premium. Many argue that as Coinbase is one of the easiest way for first-timers to trade bitcoin, this represents new money coming into the space.
ASR Wealth equities and derivatives adviser Shane Chanel described bitcoin as “a charging train with no brakes,” adding that exchanges had increasingly long backlogs of applications. “Once these funds hit the market, what do you think the price will do? This is nothing like I have ever seen before. I have never seen so much greed and fear of missing out.”
This fear might have spread to altcoin investors too. Alex Sunnarborg of hedge fund Tetras Capital theorized that recent moves were bringing back people who may have had bitcoin exposure in the past but had branched out to other cryptocurrencies. “People who had bitcoin and went into alts are going back into bitcoin,” he remarked.
A Solution to Scalability Issues?
Some are pointing to the announcement of a successful test on the Lightning Network (LN) to explain these seemingly inexplicable price moves. The LN is a plan to move some transactions off the blockchain and solve two of bitcoin’s biggest problems, scalability and high transaction fees. Were these issues to be ironed out the cryptocurrency would be even more attractive.
Excitement is also building over upcoming bitcoin futures contracts, with the CBOE starting trading on December 10th. These contracts have been broadly welcomed as increasing bitcoin’s legitimacy and moving it squarely into the mainstream.
However, some have argued that futures markets will exert downwards pressure on prices as finally the bitcoin sceptics have somewhere to be bearish. Despite, or perhaps because of, bitcoin’s spectacular price rise many senior financial figures are uncomfortable with it, Nordea Bank’s CEO going so far as calling it “a joke”. If they can express their scepticism on the futures market then we might be about to see a market correction. It remains to be seen how all the new money in the space will react if prices get any downwards momentum.