Talking Points
- Bitcoin trades through $15,000 with ease but fears continue to grow over price sustainability.
- Bitcoin is now worth more than financial services and payment giant Visa.
The DailyFX Bitcoin Glossary is designed to provide traders with a reference for important terms and concepts essential for understanding the emerging cryptocurrency universe.
Bitcoin (BTC): $15,000 And Beyond But Is The Price Sustainable?
And the BTC rally continues, hitting in excess of $15,000 in early European trade, with barely a down trade in sight. The latest price surge started overnight in Asia with Bitcoin transactions denominated in Korean Won hitting an average price of $18,000+ as the Bitcoin market in total traded in excess of $13 billion in 24-hours. The latest surge sees Bitcoin’s value exceed that of financial giant Visa, who recently announced that it had rolled out its pilot phase of its blockchain based business-to-business payments system B2B Connect.
Bitcoin has now risen in excess of 170% since the November 12 low of $5,547 and is up from around $900 at the start of 2017. These rapid gains are unlikely to be sustainable in the coming days, especially with the Chicago Board of Exchange (CBOE) BTC futures contract launching on December 10. While a liquid futures market will add respectability to the cryptocurrency space, aggressive investors will be able to use the futures to short the market, driving the price lower. With a lot of new Bitcoin investors in at recent highs, a sharp sell-off could become self-fulfilling and knock 30% or more of the current price.
We discussed BTC’s price at this week’s Bitcoin webinar and the majority view of participants had BTC hitting $15,000 by December 24 with the outliers at $10,000 and $20,000. If you would like to join us every Wednesday at 12:00pm for updated news and views, please click here.
Chart: Bitcoin (BTC) Daily Timeframe (September 29 – December 7, 2017)
The latest IG Retail Sentiment data show 66.3% of traders are net-long with the ratio of traders long to short at 1.97 to 1. The number of traders net-long is 0.5% higher than yesterday and 13.0% higher from last week, while the number of traders net-short is 11.7% higher than yesterday and 84.5% higher from last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Bitcoin prices may fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Bitcoin price trend may move higher despite the fact traders remain net-long.
Market Moves/Top 8 Capitalizations – December 7, 2017
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--- Written by Nick Cawley, Analyst.
To contact Nick, email him at nicholas.cawley@ig.com
Follow Nick on Twitter @nickcawley1
