Bitcoin (BTC) Surges Nearly 6% in 12 Hours to Move Past $6,700

Avi Rosten

The price of bitcoin (BTC) has surged nearly 6% in under 12 hours - climbing to over $6,700 - as cryptocurrency markets across the board have shown signs of recovery.

minute_CryptoCompare_Index_BTC_USD_289_51537521048448.pngSource: CryptoCompare

Unclear What’s Behind Surge

The biggest BTC news for the last few weeks came last night as the US SEC announced it was once again postponing its decision on the highly-anticipated VanEck-SolidX Bitcoin ETF until December 29th.

This news however is likely unrelated to the recent surge. The last time the SEC made a similar postponement announcement on August 8th – bitcoin dropped over 7% in price - although it is possible that investors expecting an outright “no” were somewhat encouraged.

Changpeng Zhao: Stablecoins and $6k Support Level Are Positive Signs

While such price movements are most probably attributable to short-term trading activity, taking a broader view on the state of the market yesterday – Binance CEO Chanpeng Zhao offered some reflections on the year as a whole while talking to CryptoGlobe at Consensus Singapore.

We asked him about the proliferation of stablecoins - such as Gemini’s recently launched GUSD – a development Zhao believes is very positive:

Stablecoins are huge, I think people don't understand the impact of a regulated stablecoin... If people understood what the impacts are bitcoin price would be going up now because of all the stablecoins. They are a very good channel for fiat money to come in and spread around the crypto space. I think it’s a very, very positive thing

Moreover, Zhao was keen to look at the general support level for BTC this year:

If you look at the chart, we have seen a very strong support level at $6,000 in 2018, whereas in 2014 it was $200. I never trade myself, I buy and hold. Any minute the bull market will return, historically October to December are the good months... But I don't make predictions we just react to markets

 

day_CryptoCompare_Index_BTC_USD_366_11537524721284.pngSource: CryptoCompare

Bitfinex Wants to Offer 100x Leverage For Crypto Derivatives Trading

Michael LaVere
  • Bitfinex will offer 100x leverage trading for cryptocurrency derivatives
  • According to the exchange's CTO, the hedging product is "ready for prime time"

Cryptocurrency exchange Bitfinex revealed it wants to offer derivatives products with up to 100x leverage for cryptocurrency traders. 

Hedging On Cryptocurrency Derivatives

Chief Technology Officer Paolo Ardoino told The Block on June 25 that the cryptocurrency exchange was ready to ship a 100x leverage product for certain users. According to the post, the project has been under development for some time and is “now ready for prime time.” 

The product was referenced in last month’s whitepaper published by Bitfinex for its $1 billion private token sale of LEO, stating

“Qualified Bitfinex account holders will be able to trade a new hedging product through a derivatives wallet.”

The whitepaper originally claimed that the new hedging mechanism would be released by the end of June, a timetable that fits with Ardoino’s “ready for prime time” statement. 

Ardoino confirmed that only “verified” customers will be allowed access to the product, given the risks involved in such highly leveraged trades. 

The CTO also took to Twitter to quell user concerns over Bitfinex’s existing 3.3x margin trading. Ardoino explained 100x leverage will be “optional,” and that their current leveraged trading products will be unaffected by the release. 

Big Risk, Big Reward

Bitfinex is looking to compete with rival exchange BitMEX, who already offers 100x leverage through its bitcoin perpetual swap contract. However, Bitfinex claims its product is designed as a legitimate hedging tool for clients, rather than a gambling mechanism. 

Max Boonen, CEO of trading firm B2C2, believes the product will only appeal to retail hedgers, as large investors will shy away from the risks involved in 100x trading. 

According to Boonen, 

“There’s nothing wrong inherently about 100x. But as a commercial hedger you want lower leverage margin. The larger investor wouldn’t want to take the risk of 100X, typically. They don’t want to go balls to the wall.”

The cryptocurrency derivatives market has been heating up. Last week bitcoin-bull Mike Novogratz’s Galaxy Digital announced plans to offer cryptocurrency options contracts.

Binance has also reportedly been exploring futures trading. On June 24, Binance CEO Changpeng Zhao tweeted the exchange had executed its first margin liquidation for a BTC short.