Bitcoin drops after dramatic gains ahead of futures launch

Bitcoin drops after dramatic gains ahead of futures launch
(Updates prices, adds graphic, analyst comment)
By Jemima Kelly and Gertrude Chavez-Dreyfuss
LONDON/NEW YORK, Dec 8 (Reuters) - Bitcoin lost almost a
fifth of its value in 10 hours on Friday, having surged more
than 40 percent in the preceding 48 hours, sparking fears the
market may be heading for a price collapse.
In a hectic day on Thursday, bitcoin leapt from below
$16,000 to $19,500 in less than an hour on the U.S.-based GDAX,
one of the biggest exchanges globally, while it was still
changing hands at about $15,900 on the Luxembourg-based
Bitstamp. Some market watchers attributed the lurch higher to
the coming launch of bitcoin futures on major exchanges.
Having then climbed to $16,666 on Bitstamp at around 0200
GMT on Friday, it tumbled to $13,482 by around 1200 GMT - a
slide of more than 19 percent. It was last down 8.2 percent at
$15,232.32 on BitStamp.
On Sunday, the Chicago-based Cboe Global Markets exchange is
due to launch a futures contract on the digital currency, to be
followed by CME Group the next week.
Craig Erlam, senior market analyst at OANDA in London, said
investors may have taken profits on bitcoin gains ahead of the
Cboe launch, which could open the door to short speculators who
believe the price has risen far too quickly.
"The initial bounce after this morning's sell-off suggests
there's still appetite for buying dips but that may not last if
we don't see the kind of rebound witnessed previously," said
"Saying that, the way bitcoin is trading at the minute, I
don't think anyone would be surprised to see it end the day in
the green," he added.
For an interactive graphic, click on
As investors braced for the Cboe launch, some big U.S.
banks, including JPMorgan Chase and Citigroup ,
will not immediately clear bitcoin trades for clients once
investors start trading futures contracts, the Financial Times
reported on Friday, citing people familiar with the matter.

JPMorgan and Citigroup did not immediately respond to
requests for comment.
On Thursday, Goldman Sachs Group Inc said it planned
to clear bitcoin futures for some clients as the new contracts
go live on exchanges in the coming days.
As bitcoin slumped, other cryptocurrencies climbed. Ethereum
the second-biggest, was up nearly 8 percent, according to trade
website Coinmarketcap.
For the week, bitcoin was still up almost a third. Since the
start of October, bitcoin has more than tripled in price. So far
this year it has soared about 15 fold, stoking concerns that the
bubble would burst in dramatic fashion.
Its rapid rise has drawn in millions of new investors. So
far this week, more than half a million new users have opened
wallets with retail-focused bitcoin wallet provider Blockchain,
the firm said, doubling the total number of users to 20 million
since last year.
"Like a herd, market participants have a tendency to follow
the money," said Fawad Razaqzada, market analyst, at
in London.
"So when bitcoin goes up in value by hundreds, if not
thousands, of dollars per day, the fear of missing out (FOMO)
kicks in and speculators rush to buy the cryptocurrency because
they don’t want to be left out."

(Reporting by Jemima Kelly in London and Gertrude
Chavez-Dreyfuss in New York; Additional reporting by Lisa
Twaronite in Tokyo; Editing by Alden Bentley and David Gregorio)

First Published: 2017-12-08 00:21:25
Updated 2017-12-08 22:47:42

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