After the first crypto bubble burst, bitcoin has been slowly making a comeback. Over the last three months, the cryptocurrency has tripled in price, with many analysts believing the crypto king will be back in a big way.
At the time of writing, bitcoin is sitting at AU$18166.49.
There are a lot of forces driving the price of bitcoin, as retail investors flock once again for fear of missing out.
Facebook’s Libra cryptocurrency, and the big companies funding it, is a perfect example of this.
What’s driving bitcoin’s price hike?
We’ve seen an over saturation of media interest regarding the price of bitcoin, and together with the expansion into retail trading opportunities, it seems investors are once again ready for a crypto bull run.
Well, at least that’s what appears to be happening in the US’s biggest exchange operator, CME Group. Traders are betting on whether it will rise or fall.
According to a recent Commodity Futures Trading Commission report, more small investors are likely to be bullish.
George Michalopoulos, the Portfolio Manager at Chicago fund manager Typhon Capital Management, said:
‘Traditional market participants may be more skeptical of [bitcoin] than millennial day traders.’
Cryptocurrency analyst Asher Corson said there was a lack of options besides CME for traders who want to short bitcoin.
‘CME right now is providing a unique ability for the larger players to have massive short positions with very low counterparty risk,’ he said.
The trading activity in CME’s bitcoin futures has also grown alongside bitcoin’s increasing price.
For investors wishing to invest in bitcoin, there’s normally a process that users must follow. For the US, this is done through a crypto hedge fund, or by making wages overseas.
According to Bloomberg, the Intercontinental Exchange is planning to start testing its bitcoin futures on July 22, catering to those customers.
But this could be too little too late, according to LedgerX CEO.
Bitcoin purchase gets shake up
Small US retail investors will soon be able to buy derivatives that pay with bitcoins.
Today, LedgerX, a US regulated bitcoin derivatives exchange has been given approval from CFTC to run as an elected contract market, offering bitcoin spot and derivative contracts (either cash settled or physically delivered upon expiry) to retail traders of any size.
The project will see investors having to deposit at least 10,000 dollars or bitcoins, which will go down to zero within the next year, according to Chief Executive Officer Paul Chou.
‘The license will allow retail to directly invest, and they will represent the majority of the market,’ he said.
‘Retail investors are the ones that drove Bitcoin to this level,’ Chou added.
Chou claims other cryptocurrency exchanges are six months behind the eight ball when it comes to gaining approval for additional access to bitcoin derivatives.
‘We are way, way ahead of those test efforts,’ he said.
More to come.
Ryan Clarkson-Ledward, For Money Morning
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