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Bitcoin tumbles after dramatic gains ahead of futures launch


Bitcoin lost almost a fifth of its value in 10 hours on Friday, having surged more than 40 percent in the preceding 48 hours, sparking fears the market may be heading for a price collapse.

 

In a hectic day on Thursday, bitcoin leapt from below $16,000 (£11,947) to $19,500 (£14,559) in less than an hour on the U.S.-based GDAX, one of the biggest exchanges globally, while it was still changing hands at about $15,900 on the Luxembourg-based Bitstamp.

 

Having then climbed to $16,666 on Bitstamp at around 0200 GMT on Friday, it tumbled to $13,482 by around 1200 GMT - a slide of more than 19 percent. It was last down 9.3 percent at $15,091.97 on BitStamp.

 

Bitcoin pulled back ahead of the Chicago-based Cboe Global Markets exchange’s launch of a futures contract on the digital currency on Sunday, to be followed by CME Group the next week, APA reports quoting Reuters.

 

Craig Erlam, senior market analyst, at OANDA in London said investors may have taken profits on their bitcoin gains ahead of the Cboe launch, which could open the door to short speculators who believe the price has risen far too quickly.

 

“The initial bounce after this morning’s sell-off suggests there’s still appetite for buying dips but that may not last if we don’t see the kind of rebound witnessed previously,” said Erlam.

 

“Saying that, the way bitcoin is trading at the minute, I don’t think anyone would be surprised to see it end the day in the green,” he added.

 

As investors braced for the Cboe launch, some of the big U.S. banks, including JPMorgan Chase JPM.N and Citigroup C.N, will not immediately clear bitcoin trades for clients once investors start trading futures contracts, the Financial Times reported on Friday, citing people familiar with the matter.

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/ 19 January, 2018

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