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Bitcoin price is continuing its usual upward trajectory, barely showing any signs of correction. For the past five days, the cryptocurrency has been registering record highs every single day. The rally is mainly fueled by Wall Street buzz amid this week’s announcement by the CME Group, to enable trading Bitcoin futures contracts before the end of the year.
Friday witnessed yet another fresh all-time high of $7,747 on Bitfinex, with Japanese market leading the way in the global scales followed by USD-based trading markets and South Korea. At the time of writing, Bitcoin is trading at $7300 a piece – an increase of 3.55% in the past 24 hours – posting a market cap of $199 billion. Almost $10 billion trading in a single day!
The question is how long will this frenzy continue? The analysts have already started to express some concerns. For instance, Wall Street strategist Tom Lee is concerned that bitcoin be setting itself up for a correction and urges investors to exercise caution, even in the wake of optimistic news from the CME Group.
It is important to understand that this rise is fueled by Segwit2x supporters who are buying a lot of Bitcoins. These are miners and some obscure figures that want to take control of Bitcoin. They will buy as much Bitcoin before the fork, and when exchanges allow deposits and give them 2x and 1x coins, they will dump 1x as much as they can. Doing that, 2x price will increase.
While this scenario can’t be ruled out, there is a good chance people are only buying Bitcoins to get the exact amount of Segwit2x coins, which is why we’re seeing this rally.
According to Tom Lee, Bitcoin has exceeded his short-term price target by more than $1,000, and he is concerned that the rally is getting ahead of itself, citing “contemporaneous fundamentals” in a note distributed to Fundstrat clients this week.
Fundstrat’s bitcoin valuation strategy is modeled off of Metcalfe’s law and predicts that bitcoin’s fair market price is the square of the number of its users times the average transaction value. Lee does not believe that the network’s user base has grown enough to justify the present Bitcoin price.
According to him, Bitcoin could fall up to $5,500 range short term, but he maintains his mid-2018 price target of $6,000 and five-year target of $25,000.
Top Stories from the Crypto World
1. I’m Open to Bitcoin, says Goldman Sachs CEO
In an interview with Bloomberg, Lloyd Blankfein, CEO of Goldman Sachs, said that he has a “level of discomfort” over bitcoin as he has with anything that is new. He continued to say, “I’ve learned over the years that there’s a lot of things that workout pretty well that I don’t love.”
“Maybe in the new world, something gets backed by consensus … If we went into the future and bitcoins were successful, I would be able to explain how it’s a natural evolution of money.” Blankfein added.
2. Bobby Lee speaks out on China regulations and SegWit2x
In a recent Reddit AMA, held on the /r/BitcoinMarkets subreddit, Bobby Lee, BTCC chief executive, touched on a number of topics. The SegWit2x hard fork is due to activate in approximately two weeks — which was also the prominent topic of discussion.
Lee reaffirmed that, BTCC being an NYA signatory, will continue to support SegWit2x. Lee believes that Bitcoin should continue to scale on-chain as well as through second-layer solutions.
Lee also shed some light on China’s Bitcoin exchange ban. Prior to China’s regulations, BTCC’s Chinese trading platform was the longest-running Bitcoin exchange. He said:
“I’ve also heard those rumors, but from what I can see here on the ground, there are no plans for bitcoin exchanges to reopen in China,”
3. Argentinian Futures exchange is looking to offer Bitcoin
Argentina’s largest futures market, Mercado de Termino de Rosario (Rofex) is focusing on how it might offer cryptocurrency futures as part of its suite of offerings.
Rofex has preliminarily drafted its plans to provide custody services for the digital asset and the use of Bitcoin as collateral in futures trading for its clients.
Diego Fernandez, Roflex head, said that the possible offering is at “laboratory stage” and that the firm plans to make an announcement “before the end of the year.”