Bitcoin – Blink and You’ll Miss It

What a day for Bitcoin on Thursday, with yet another record high in a week that has seen Bitcoin move from Friday’s $10,840.45 close to more than $17,000 before easing back to $15,460 at the time of writing.

Depending on which exchange you look at, Bitcoin had even surpassed $19,000 and that’s quite a move when considering the fact that Bitcoin’s relative stress index was already at 96% on Thursday.

For those that had plucked up the courage to take a punt on Bitcoin last week, that would be a pretty good return, with the Bitcoin pullback coming from a significant amount of profit taking.

Some degree of complacency would have entered the Bitcoin world by now and with Bitcoin down 6.87% through the first part of the day and well below the latest record high, we could see another bounce on the cards.

Interestingly, it’s during the dips however that Bitcoin remains susceptible to a more sizeable sell-off. Bitcoin has managed to come off its intraday lows this morning, having dropped by more than 10% earlier in the day, but it’s going to need to bounce back into positive territory for the markets to jump back in with conviction.

Ripple and Litecoin have both been a victim of lateral moves, something that few could accuse Bitcoin of. It’s a fickle market and it’s about to see a significant change in investor profile. The impact of the futures market on Bitcoin has been touted to be a positive one. Is it really going to be Bitcoin’s knight in shining armour?

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While the opening of the futures market will certainly bring more money to the table, there are a few things that need to be considered and are material to how Bitcoin will perform come the end of the year and beyond.

The futures market is likely to bring with it a number of investors who will be looking to go against the Bitcoin grain and go short. As we see in other asset classes, short positions can ultimately dictate sentiment towards an asset class. While the futures market may not sink Bitcoin, it may influence the steepness of its rallies, with more balanced trading patterns than are currently seen, mostly one directional. Those trading on exchanges where short positions are permissible may have been waiting for the futures market to open up. It’s certainly an unknown and then there is the fact that investors currently holding Bitcoin could sell and move into the regulated futures markets, which could weigh heavily on Bitcoin. After all, the futures market does not involve actually holding Bitcoins.

With institutional money going into the futures market, Bitcoin’s path could ultimately be dictated by the smarter money sitting in the futures market.

It’s far from cut and dry and, while Bitcoin’s recent gains may have had little influence from traditional market forces, things may change in the weeks ahead.

One thing is certain, Bitcoin investors are unlikely to be getting too much sleep at the moment, with records and dips coming in at pace. Blink and that record run could have come and gone.

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