As I wrote on Thursday, the huge price spikes on bitcoin probably was attributed to hedge funds jumping into the crypto.
The hedgies jumped in as the Chicago Board Options Exchange, CME and Nasdaq came out with plans to offer options on bitcoin, which gave them a nod that the cryptocurrencies were here to stay.So as Friday dawns in the US, the $2,250 drop tells me that Asian and European traders are selling off so they are not holding a large stake over the weekend.
This is the what I wrote will be the problem with the options futures trade. What to do with a $5,000 move in bitcoin after the futures contract closes on Friday evening and does not open again until Sunday night?
This Sunday night will be the beginning of the CDOE options trading, so I believe we will see further selling on Friday from traders to protect themselves on the downside.
Bitcoin evangelists will call this FUD: Fear, Uncertainty and Doubt from non-believers. this is the way they deal with people like me who are looking at bitcoin as an investment vehicle rather than the life changing device that will challenge the finance world.
Let’s see how this plays out over the weekend. If you are a buy and hold bitcoin investor then it may be a good time to add to your holdings on the cheap.