Markets hit by geopolitical worries, but bitcoin surges through $12,000 - business live
Worries over Brexit, US tax reforms and the debt ceiling are all weighing on shares today
- Introduction: Markets are down
- European in the red after Asian losses
- Nikkei suffered biggest fall in eight months
- Worries over Trump, Brexit, US debt ceiling all blamed
- Bitcoin hits new highs - can it really last?
- Australian growth missed forecasts
13:37
Newsflash: America’s private sector created 190,000 jobs last month, according to payroll operator ADP.
That’s a pretty decent performance, and bang in line with forecasts. It suggests the US employment market remains healthy - which bodes well for the wider Non-Farm Payroll (NFP) figures on Friday.
https://twitter.com/RollinFrederic/status/938400654481076224/photo/1
But it’s important that the NFP figures also show wage growth, otherwise Americans risk missing out on the benefits of the recovery.
Why bitcoin futures could trigger a correction?
One rational explanation for bitcoin’s recent explosive surge is that investors will soon be able to trade bitcoin futures.
The advent of bitcoin derivatives will open up cryptocurrencies to a wider range of investors (City trading desks aren’t necessarily au fait with bitcoin wallets). That could trigger a new surge of money in, right?
Well, possibly. But derivative contracts can also be used to bet that an asset will lose value. So they will allow traders to bet that bitcoin is overvalued and heading for a crash.
This chart shows how Bitcoin has surged ahead of its recent ‘moving averages’ - a traditional measure of an asset’s value. If a correction comes, it could possibly drop back to these levels.....
Neil Wilson of ETX Capital agrees that futures contracts will make bitcoin “price discovery...a lot less opaque”.
"People will see just how badly priced it is. At the moment it’s dominated by enthusiasts and speculators who want the price to go up.
Once you get enough shorts and enough people taking the other side of the bet, there will have to be a significant repricing that pops the bubble."
Thanks!