Bitcoin Shrugs Off Bubble Burst Fears To Record $2,500 Single Day Gain

Bitcoin defied chatter about a bubble ready to pop, as it went on to record its biggest gain in a single day of $2,500. The cryptocurrency topped record highs of $14,400 after a stunning 18-hour run that saw it jump from under $12,000.

However, not everyone is convinced that Bitcoin gains are here to stay even as Institutional investors prepare to take positions. Nordea Bank CEO, Casper von Koskull, has already called the rally a ‘joke’ as the head of Denmark’s largest pension fund insists they are not comfortable with the spike. Amidst the sentiments, bitcoin has continued to surge.

The price of bitcoin can now buy more than 11 ounces of pure gold after a jaw-dropping tear the entire year.

 Bitcoin Immediate Catalysts

The scorching cryptocurrency is up by more than 1500% for the year as it shows no signs of slowing down. Growing chatter about the launch of bitcoin futures contracts is believed to be the latest catalyst driving the digital currency’s price.

CBOE is set to launch bitcoin futures over the weekend as CME Group prepares for a similar launch on December 18, 2017. NASDAQ will launch futures trading in the summer of next year. JPMorgan Chase is set to launch its own future contracts despite the firm’s Chief Executive Officer taking a swipe at the cryptocurrency a few weeks back.

The sale of Futures contract poses the biggest test to bitcoin impressive run for the year. The derivatives is set to attract a flood of new capital, more so, from institutional investors who for the better part of the year have been on the sidelines.

 Red Flags

Amidst the excitement about the Futures contracts, some investors have warned that such derivatives could have serious repercussions. Interactive Brokers CEO, Thomas Petterfy, has warned that the derivatives could trigger a 2008 style financial crisis.

Coutts Investment strategist, Lillian Chovin, has also warned about the instability the cryptocurrency faces given that its blockbuster rally is not based on any underlying fundamentals. Coutts is not only worried about bitcoin bursting but concerned that it could be part of a wider tech bubble.

“Our view at Coutts is that, as an investment asset, electronic currencies like Bitcoin have nothing but sentiment backing them up. We, therefore, have no current plans to include them in our investment strategy,” said Ms. Chovin.

The concerns have done little to sway investor’s sentiments on the digital currency. Reports indicate that exchanges are in the process of processing mountains of applicants waiting on verifications of new deposits. Once these new funds hit the market, the price of bitcoin is expected to rise as most of them are expected to enter long positions.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.