The wait is over for regulated bitcoin futures contracts (at least in the U.S.), and markets are reacting strongly to the news.
As per CoinMarketCap, bitcoin (BTC) moved above $10,500 after the news this morning that the U.S. Commodity Futures Trading Commission (CFCT) had approved the listing of three such products from CBOE, CME Group and Cantor Fitzgerald.
At press tine, the world's largest cryptocurrency by market capitalization had added 3.9 percent on the news, bringing gains to 11 percent over the last 24 hours.
The chart above shows:
- The falling trendline has been breached.
- A higher lows pattern has been established.
- The relative strength index is bullish (above 50.00) and rising.
As such, it appears bitcoin could revisit $11,000 with the position push. However, the longer duration charts favor consolidation as discussed here.
It's also possible the move may have been largely factored in already. (The CME Group talked about their plans to list BTC futures on Nov. 1. Since then, BTC has appreciated by 69 percent.)
One of the big reasons behind the rally to record highs above $11,300 has been a possible surge in the inflow of yield-hungry institutional money into bitcoin via the derivatives market.
- While 1-hour chart does favor further upside, caution is still advised as the good news may have been priced-in. Also long duration charts signal bull market exhaustion.
- As noted here, consolidation followed by a 1-hour close above $10,850 on the back of stronger volumes could yield a more sustainable rally.
- Also, a risk of "sell the fact" (bitcoin rallied on CME rumor, could be sold/profit taking on confirmation of the rumor) trade cannot be ruled out.
Balloon image via Shutterstock
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