Bitcoin fell back below $19,000 in the early hours of this morning after it came tantalisingly close to $20,000 yesterday – as the CME Group's new bitcoin futures contracts dropped.
The cryptocurrency rose as high as $19,694 yesterday, according to Coindesk, which takes into account prices at several exchanges. However, this morning it opened at $19,086, and fell as low as $18,831, 1.3 per cent lower.
The news came as CME Group launched bitcoin futures, the second exchange to do so after Cboe launched its own version last week.
The move is seen as a step towards acceptability among institutional investors, although the cryptocurrency's volatility is likely to continue to put many off.
But the CME's bitcoin front-month futures contract fell six per cent in the first half hour of trading, according to Reuters, dropping to $18,805, below the $19,500 reference price set for the January contract.
That came as a blow after Cboe's contract rose more than 20 per cent after it was launched last week, crashing the exchange's website.
"With every new milestone there’s fresh discussion around bitcoin’s legitimacy and potential, both as a trading instrument and revolutionary digital currency," said Lee Wild, head of equity strategy at Interactive Investor.
"Valuing cryptocurrencies is like sticking your finger in the wind, but traffic is still very much one-way.
"Introducing futures contracts in the US was meant to give short-sellers access to the market and improve liquidity, but availability is still fairly restricted. The introduction of bitcoin futures on the Chicago Mercantile Exchange over the weekend may help, but it will take time.
"Until it becomes easier to sell short, buying dries up, or there are tech issues or a major hack, bitcoin will keep passing milestones with alarming regularity. Right now, there’s a long queue of investors, both amateur and professional, still waiting for a ride. This bubble is not bursting yet.”
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