Crypto-chaos at Year-end

Bitcoin’s more than 6% tumble on Thursday looks to have been relatively short lived, with Bitcoin rising by 3.22% to 14,936.11 at the time of writing.

Sentiment towards the usual suspects turned sour on Thursday, following reports that the South Korean Government was considering to shut down some of the country’s crypto-exchanges and impose real-name cryptocurrency transactions.

Gains through the early part of the this morning have come largely as a result of a bounce in Bitcoin futures prices and not a shift in sentiment towards the latest regulatory revelations, with the South Korean market having been pivotal in December’s crypto-rally.

The good news for the Bitcoin bulls is that Cboe futures prices have seen sizeable gains through the morning, with trading volumes continuing to pick up. At the time of writing, the January contract was priced at $14,880, up $1,125, while the February and March contracts stood at $15,050 (+$1,145) and $15,270 (+1,260) respectively. Looking at the direction of the futures market, there seems to be less concern over the latest South Korean government chatter, though it’s ultimately too early to tell what will be the eventuality.

As we saw when China decided to clamp down, Bitcoin and the cryptomarkets were able to recover relatively quickly, though this time around there may be some complacency on the part of investors, the assumption being that the exchanges will likely continue to be left untouched.

For the rest of the day, with Bitcoin futures providing little room for manoeuvre, Bitcoin will likely hold at sub-$15,000 levels in the early part of the day, with trading volumes likely to be on the slide as Western markets call it a day ahead of the New Year.

There’s plenty to consider for the crypto investor, with news of Bitcoin’s SegWit2x fork hitting the market on Thursday, following November’s cancellation. Other news includes the kidnapping of a Bitcoin exchange manager in Kiev, with the Indian government also taking the opportunity to sledge Bitcoin, reminding ‘want to be’ investors that it is not legal tender and offers no protection.

The list of governments and central banks issuing warnings is ever increasing and, should price and volatility continue to rise, things are unlikely to get any better for the cryptocurrencies.

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It’s certainly been a spectacular end to an unprecedented year for the cryptocurrencies and next year is likely to be all the more interesting, if December is anything to go by.

Exponential gains through the year have put the cryptocurrencies firmly on the map as an asset class, with even the savvier investor unable to ignore the likes of Bitcoin and Ripple.

The launch of Bitcoin futures on the Cboe and CME Group platforms this month was certainly a milestone and more is to come with the anticipated launches of the Bitcoin ETFs and hedge funds. While not on the horizon, it may not be too long before other cryptocurrencies are offered on the futures exchanges and blended ETFs are launched. All of this is assuming that there is no cryptomarket implosion in the New Year, a possible eventuality if regulators and governments get their way.

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