The craze for cryptocurrencies entered a new chapter on Monday as bitcoin futures rocketed by one-fifth of their value at a hotly anticipated launch, while Asian shares climbed amid optimism about global growth.
The most-traded contract on the Chicago-based CBOE Global Markets exchange opened at US$15,460 in New York on Sunday evening, before leaping to a high of US$18,700 – a gain of 21%. It was last quoted at US$18,100, a premium of more than US$1,700 to the price on the Gemini Exchange.
The futures are cash-settled contracts based on the auction price of bitcoin in US dollars on the Gemini Exchange, which is owned and operated by virtual currency entrepreneurs Cameron and Tyler Winklevoss.
The cryptocurrency has boasted a gravity-defying 15-fold gain since the start of the year, attracting institutional interest and no small amount of question marks.
The acting governor of the Reserve Bank of New Zealand on Sunday said bitcoin appeared to be a “classic case” of a bubble. “With a bubble you never know how far it is going to go before it comes around,” Grant Spencer said on television.
Some market participants believe the fallout across other financial assets from a potential bursting of the bubble will be limited.
“Bitcoin‘s market capitalization is currently around US$240 billion, which is much smaller, say, than the value of gold outstanding,” said Andrew Kenningham, an economist at Capital Economics. “If the price of bitcoin fell to zero today, the paper losses would be equivalent to a 0.6% fall in US equity prices. As most investors have bought bitcoin at much lower prices, the relevant losses would arguably be smaller.”
Asian shares were buoyant, with every single market but one in the black, following strong US payrolls data and better-than-expected Chinese trade figures on Friday.
Spreadbetters pointed to a strong opening for European shares, while US stock futures indicated a firm start for the S&P 500, which was seen up 0.1 %.
The MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.5% to 552.38, well above a recent two-month trough of 542.27 points.
Japan’s Nikkei climbed 0.6%, while Chinese shares rallied, with the blue-chip CSI 300 index up 1.3%. Vietnam was the only Asian index in the red.
Currency market investors were cautious ahead of a big week for policy meetings globally, with the Federal Reserve the only major central bank expected to raise interest rates. The Bank of England and the European Central Bank are likely to hold rates steady.
The dollar steadied near a one-month top against the yen, after climbing 1.2% last week. The dollar index, which measures the greenback against a basket of currencies, eased 0.1% from close to a three-week high.
Traders will keep their eyes peeled for the Fed’s future rate projections as US wage growth and inflation crawl at a snail’s pace.
Data out on Friday showed average hourly earnings in the United States nudged up 5 cents or 0.2% in November, when economists had looked for a 0.3% gain.
The weakness persisted despite stronger-than-expected non-farm payrolls, which rose by 228,000 in November.
“We’ll be listening close for any signs of a dovish shift,” said Aerin Williams, New York-based forex strategist for Citi about the December 12-13 Fed meeting.
Elsewhere, oil prices slipped after the latest rise in the US rig count pointed to an increase in production there.
US crude was down 15 cents at US$57.21 a barrel and Brent crude inched 17 cents lower to US$63.23, drifting away from a recent 2-1/2 year peak of US$64.65.
Spot gold was a tad firmer at US$1,249.96 an ounce.