This week, Bitcoin price, on its usual upward trajectory, barely blinked as it smashed through the $7,000 mark. The Bitcoin community obviously celebrated as the king of digital currencies shows no sign of slowing, but what is behind this latest rally?
The biggest factor behind the rally was the announcement of Chicago Mercantile Exchange’s decision to offer Bitcoin futures.
Firstly, what is a Bitcoin future and why is it causing such a buzz on main street, Wall Street, as well as on the Bitcoin price.
Banking on what lies ahead
Futures are an essential part of mainstreet trading and investing; however they are also reserved for more steady and less volatile assets. Now, with this decision, Bitcoin is being legitimized somewhat, and that has again piqued Wall Street’s interest.
Wall Street, despite their divide and their clashing of ideologies, still has an important role to play in Bitcoin price as the financial bastion has shown their influence before.
In an earlier rise, coming after the Aug. 1st fork, Bitcoin hit a massive rally that was attributed to Wall Street flooding into Bitcoin once the heat was off from the so-called ‘civil war.’
Now, this move by the CME has again given Wall Street more reason to put faith in Bitcoin and thus the demand has skyrocketed, along with the price.
Still in its infancy
Bitcoin’s step into mainstream trading, however, is also a poignant reminder that the digital currency is still in diapers when it comes to institutionalized trading and investing.
Large-scale mass adoption in trading has a long way to go as there is still room for ETFs, which would really open things up, but that is a long way off still.
The SEC has maintained their position on a Bitcoin ETF, stating that it is not on the cards while they continue to watch its volatility and nature.
Spike and drop
Bitcoin’s rally reached as high as $7,300, but quickly fell over $500 in a mini-correction. However, it has leveled off again over $7,000.
While in the world of Bitcoin that does not seem like a massive swing, it is those moves that the SEC does not like the look of.
The SEC noted that Bitcoin had “fundamental flaws” that made it a “dangerous asset class to force into an exchange traded structure.”