Earlier today, on December 26, bitcoin price surged by more than 10 percent and entered the $15,000 region for the first time this week.
The recent price surge of bitcoin follows a major correction which occurred on December 23 and 24, which led to a sudden drop in the price of bitcoin to $11,500. However, within less than 48 hours, bitcoin and most of the cryptocurrencies in the market have recovered in value.
Trav, a bitcoin analyst, suggested that the price of bitcoin has surged throughout the past 24 hours because of the resumption of bitcoin futures trading on the Chicago Board Options Exchange (Cboe) and CME, since regulated stock markets and options exchange only operate during the weekdays.
“Why did the market move? Futures opened tonight. There’s a new dynamic in town.”
On Cboe and CME, the demand for bitcoin from institutional and retail investors in the traditional finance market has been evident, given that the price of bitcoin on the two platforms have been higher than that of the global average bitcoin price. Currently, on Cboe, bitcoin is being traded at $15,500, while the global average price remains just short of $15,050.
Other major bitcoin markets including Japan and South Korea have also demonstrated significant premiums over the past few days. On Bithumb, the world’s second largest cryptocurrency exchange based in South Korea, bitcoin is being traded at over $19,000, with a $4,000 premium over the global average bitcoin price.
According to cryptocurrency market data provider CryptoCompare, the South Korean bitcoin market is only accountable for less than 5 percent of the global bitcoin market. Hence, lower supply of bitcoin in the South Korean market and skyrocketing demand have led to the formation of substantial premiums.
As the global bitcoin market stabilizes and matures, premiums and arbitrage opportunities in regions like South Korea and Japan will dematerialize. But, in the short-term, it is likely that the premiums in some markets will remain high.
Previously, CCN.com reported that Charlie Lee, the creator of Litecoin and former Coinbase executive, stated that the South Korean market is driving up the price of bitcoin because of its high demand for the cryptocurrency.
“Ever since China banned the bitcoin exchanges, (South) Korea has really taken up the mantle. There is a lot of frenzy in (South) Korea right now and I think that’s driving up the price,” said Lee.
Even when the price of bitcoin fell to $11,500, in South Korea, the bitcoin price did not fall below the $15,000 mark.
As such, in consideration of the increasing demand for bitcoin in regions like Japan and South Korea, and from investors in the traditional finance market, the price of bitcoin will likely grow rapidly in the short-term.
In 2018, several investors including billionaire hedge fund investor Mike Novogratz, TenX founder Julian Hosp, and Max Keiser noted that the price of bitcoin could reach $60,000, experiencing both minor and major corrections on the way.
On CNBC’s Squawk Box, Hosp stated:
“I think we’re going to see bitcoin hitting the $60,000 dollar mark, but I also think we’re going to see bitcoin hitting the $5,000 dollar mark.”