Bitcoin rocketed above $19,000 for the first time on Thursday before falling sharply from its record high.
In trading on the Coinbase exchange, the digital currency hit a high of $19,340.
Bitcoin 1-day chart
“It goes without saying that prices have reached a level where sentiment is exhibiting short-term euphoria,” said Mark Newton, managing member at Newton Advisors, in a note to clients.
“But to think prices are at mania levels where this could suffer a serious crash here… is a bit ridiculous.”
“I truly don’t think people are involved on a mass scale yet. We’ve heard the fraud claims. Now we need people profiting immensely all around us and making forecasts for $1 million, etc., for it to truly have reached a euphoric peak,” Newton said.
The digital currency began the year below $1,000 and its gains have accelerated as investor interest grows. Chicago-based Cboe Global Markets is planning to launch bitcoin futures on Sunday, while the world’s largest futures exchange, CME, is set to launch its futures product the following week. The addition of bitcoin futures by two respected exchanges marks another step towards establishing the digital currency as a legitimate asset class.
Hedge Funds Rushing to Open Doors
Bulls are on parade as hedge funds pour money into bitcoin-related projects and products. Traditional hedges have been outperformed by cryptocurrency funds in 2017, and the phenomenon has turned into a full-fledged feeding frenzy. New indices are popping up to track it all. Ecosystem stalwarts Bitgo and Bitpay expect new rounds of funding, and well-over 100 such funds are now dedicated to cryptocurrency.
See Forbes Article: Crypto Boom: 15 New Hedge Funds Want In On 84,000% Returns
Seasoned Advisors Exercising Caution
While Newton Advisors, the 100+ Crypto hedge funds that have opened this year and just about everyone you ask says sky’s the limit for Bitcoin, other experts have a different opinion. Matt Siebenthal isn’t as optimistic- citing a possible correction to 7500 or lower before the cryptocurrency market- led by Bitcoin resumes it’s uptrend.
“I’m still bullish on cryptocurrency and a huge believer in the future applications of blockchain technology. But we’re near all time highs heading into historically the worst performing quarter of the year for Bitcoin. I wouldn’t be in any hurry to rush in here.”
Michael Novogratz, the former macro manager who’s turned into one of the biggest champions of bitcoin, is shelving plans to start his cryptocurrency hedge fund and is predicting that the digital money may extend its plunge to $8,000. Novogratz isn’t giving up on them and said he still believes they’ll be a disruptive force in finance.
I don’t want to be in the difficult position of explaining to my limited partners 8-14 months from now why the assets have dropped by 80%.
Ahead of CME & Nasdaq Bitcoin Futures, Hedge Funds Clamor for Access
As cryptocurrencies hit another all-time-high, racking up a half trillion dollar market capitalization, interest is booming. With futures market makers CME (Monday) and Nasdaq (mid 2018) bringing ‘legitimacy’ to bitcoin and its family, once reticent hedge funds have stopped being coy.