Bitcoin surges past $9k in thousand-point milestone
‘Fear of missing out’ drives investors into another frenzy
The price of bitcoin surged past $9,000 over the weekend for the first time, a rise of nearly 900% this year. Its rise is only getting faster.
Bitcoin rose as high as $9,682 Monday morning in Asia, meaning it has taken just seven days for the digital currency to go from $8,000 to $9,000, according to research site CoinDesk. That marks the fastest thousand-point rally in its short history, surpassing the eight days it took to go from $3,000 to $4,000, and the nine days it needed to go from $5,000 to $6,000.
“Bitcoin has seen another frenzy of buying as the fear-ofmissing-out trade bites even harder,” Chris Weston, chief market strategist at IG Group , wrote to clients on Monday, while adding separately that “mad momentum” is driving the price higher.
He noted that Coinbase, the largest bitcoin exchange in the U.S., added about 100,000 accounts last week from Wednesday to Friday. That brings its total to about 13.1 million, underscoring the surge in activity among retail participants.
By comparison, Charles Schwab Corp. , the prominent San Francisco-based discount brokerage that invests in traditional markets like stocks and bonds, had 10.6 million active brokerage accounts as of October. Although to be fair, total client assets in Schwab accounts are $3.3 trillion, substantially higher than in Coinbase accounts.
Bitcoin, which started 2017 at about $1,000, has now hit eight different 1,000-point milestones this year alone. That stands in contrast to the 1,230 days it needed to initially hit $1,000, and to the 1,269 days it took after that to go from $1,000 to $2,000.
Of course, simple arithmetic shows that the more the digital currency rallies, the smaller percentage gain it takes to achieve these thousand-point milestones. A move from $1,000 to $2,000 is a 100% gain, whereas an increase from $8,000 to $9,000 is a 13% gain.
Bitcoin has had several sharp swings even amid the big rally, suffering through five separate declines this year of more than 20% off recent highs. The latest came earlier this month, when bitcoin fell more than 25% over a four-day stretch before quickly rebounding.
Bitcoin has a market capitalization of about $161 billion, according to industry site Coinmarketcap.com.
The focus now centers on CME Group Inc., the world’s biggest exchange group, which is expected to launch a futures contract based on bitcoin as soon as the second week of December. The U.S. Commodity Futures Trading Commission is reviewing the exchange’s plan.
Futures are derivatives contracts that investors and companies typically use to speculate on prices or hedge risk against market swings. Derivatives traders acknowledge the complexities that exchanges face in this growing market, such as how to value bitcoin derivatives and whether there will be enough traders who can consistently post prices.
CME’s smaller rival, Cboe Global Markets Inc., is also hoping to launch bitcoin futures.
“There are others who see downside risks from the introduction of bitcoin futures, but [the] price now is roaring ahead and it feels like 10,000 is not too far away here,” Mr. Weston said. Source: The Wall Street Journal