Investors looking for a Santa rally through the weekend would have been disappointed, with the general trend being negative going into the holidays.
Over the weekend, we saw Bitcoin bounce back to $15,700 levels before another sell-off, which saw a Sunday low of $12,488. It wasn’t as bad as Friday’s $11,159, but with Bitcoin’s lows getting lower and the futures markets also showing existing contract prices on decline, it’s going to be tough for Bitcoin to rally though to record highs through the holiday.
Negative news across the cryptomarkets hasn’t helped, with price manipulation talk doing its rounds again, affecting investor sentiment towards Bitcoin. Bitcoin Cash has not been much better after calls of insider trading ahead of Coinbase offering Bitcoin Cash on its exchange.
A lack of regulatory oversight and weak self-policing standards is a bad combination for the market and if the cryptocurrencies are wanting to avoid a shift in regulator attitudes, there will need to be better standards imposed by the exchanges, particularly as the investor base widens.
With the futures markets shut for the holiday and trading volumes on the lighter side, there’s unlikely to be any major moves across the currencies by December standards, though Bitcoin Gold, Ethereum, QTUM and IOTA have managed to make some relatively meaningful gains at the time of writing. Bitcoin Gold and Ethereum are up 3.82% and 4.94% respectively, while QTUM leads the way, up 5.31%.
Investors will need to get over the events of the last few weeks, where Bitcoin rallied to just shy of $20,000 before falling back to $11,000 levels to then recover to $14,025 at the time of writing. The support has been there though the markets may well begin to question whether it is actual support or price manipulation that has been driving the volatility.
The news has certainly hurt and the jury’s out on whether Bitcoin investors will be able to handle the concentration of Bitcoins held amongst a small number of investors. The same issues may exist across other cryptocurrencies, but until there’s any details, Bitcoin will likely remain under greater scrutiny.
With the markets having gotten through a testing first week of the CME’s Bitcoin futures trading, the next step in Bitcoin’s evolution will be the anticipated launch of Bitcoin ETFs, with a number of ETFs having been filed since the launch of the Cboe and CME Group futures contracts.
Influence will undoubtedly increase in the weeks ahead, with speculative investment likely to get all the trickier. We didn’t see a futures driven upside in Bitcoin last and we may see similar trends stemming from the upcoming ETFs, which are also to invest in the futures markets and not Bitcoin itself.
The existence of both long and short Bitcoin ETFs will be a factor that investors will need to consider and, should we see the shorts garner greater attention, the cryptomarkets could be in for another bout of volatility.