Bitcoin Bulls Charging Past $16,000 Burdens Exchanges
$BTCUSD, $CME, $CBOE
Bitcoin surged past $16,000 for the 1st time Thursday, with demand to trade the cryptocurrency buckling one of the largest exchanges.
Bitcoin’s rally of more than $3,000 in the past 24 hours continues to defy skeptics, as mainstream demand for the world’s largest cryptocurrency explodes.
Investors rushing to open new accounts or place orders Thursday left Coinbase, the largest US exchange, warning of outages and slow transactions.
Thursday it topped out at $16,777.08 after starting the day at $13,363.25.
Bitcoin is currently trading at 16,397.9941+1,913.01, or +13.21%
That takes its rally this year past 1,500% and its market cap is now at $274-B.
“This is irrational exuberance,” Royal Bank of Scotland Chairman Howard John Davies said in an interview Thursday. “This is a very, very unusual market, that shows we’re not in a normal 2-way trading market.”
Daily price swings of that magnitude and weakness at the exchanges underscored concerns raised Wednesday by some of the world’s biggest brokerages, who told regulators the contracts have been rushed to market without enough due diligence.
The new Bitcoin derivatives products are slated to begin trading this month and are expected to boost mainstream demand. On a day such as Thursday, trading would’ve paused under proposed daily price-swing limitations.
The slowdown on exchanges also highlighted the disparate pricing that can occur.
The surging demand on Coinbase sent prices as high as $19,697 at of 11:23a, higher by more than $3,000 than other exchanges.
Coinbase added at least 300,000 users since just before Thanksgiving Holiday. The company had 13.3-M users as of 26 November, this is up from 13-M on 22 November, and 10.6-M in September.
The brokerages’ have concerns that exchanges which are set to offer Bitcoin futures and options have failed to get enough feedback from market participants on margin levels, trading limits, stress tests and clearing.
Those warnings were laid out in an open letter via the Futures Industry Association Wednesday.
Cboe Global Markets Inc. (NASDAQ:CBOE) said it will start trading Bitcoin futures on 10 December, while CME Group Inc.’s (NASDAQ:CME) contracts are set to debut on 18 December.
Nasdaq Inc. is planning to offer futures in Y 2018, according to a person familiar with the matter. Cantor Fitzgerald LP’s Cantor Exchange is creating a Bitcoin derivative, and startup LedgerX already offers options.