The bitcoin price continued to test $7,000 on Thursday following a $500 flash crash earlier in the day.
As CCN reported, an exuberant Thursday-morning trading frenzy raised the bitcoin price above $7,000 for the first time. Not content with that level, the bitcoin price surged another $350 on the heels of massive buy pressure at bitcoin exchange Bitfinex, topping out above $7,350 to set a new all-time high.
Immediately following this rush, the bitcoin price fell prey to a flash crash, and it plunged to near $6,850 within ten minutes and eventually tapered off to $6,753.
However, the bitcoin price turned a corner and quickly recovered to $6,900, and it has spent the remainder of the day trading above that level and surpassing the $7,000 mark on multiple exchanges. Fueled by significant premiums at Korean exchange Bithumb, the bitcoin price is currently trading at a global average of $7,009. This represents a 24-hour increase of 6% and gives bitcoin a $116.7 billion market cap.
There is no clear explanation for the flash crash, but it is likely a large-scale trader was taking profits following the bitcoin price’s record-setting week. At the time of the crash, bitcoin had appreciated close to $1,000 over the course of the previous 24 hours, so it is not surprising that the rally halted when it did.
Nevertheless, the bitcoin price demonstrated resilience following the flash crash, and its quick recovery is evidence of investor and trader optimism about derivatives exchange operator CME Group’s announcement earlier this week that it will provide institutional traders with access to bitcoin futures contracts as early as this year. The launch of bitcoin futures is widely expected to lead to the first Bitcoin ETF, an exchange-traded fund that will hold bitcoin futures contracts.
Some Wall Street investors are concerned that making Bitcoin ETFs available to retail investors is “playing with fire” and could lead to a repeat of last decade’s financial crisis, but the prevailing view among industry analysts is that the introduction of bitcoin futures will greatly increase liquidity within the bitcoin ecosystem and will help the flagship cryptocurrency mature as a financial asset.
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Last modified: May 21, 2020 9:09 AM UTC