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Sydney/Moscow - Bitcoin surged past $16 000 for the first time on Thursday, with frenzied demand to trade the cryptocurrency buckling one of the largest exchanges.
The world’s biggest cryptocurrency has rallied more than $3 000 in the past 24 hours as mainstream demand for bitcoin explodes. Coinbase said it’s experiencing record traffic that has slowed trading, while Trezor, a wallet service, tweeted that it’s having “minor issues” with its servers.
Bitcoin listed at $16 103 as of 11:45 in Bloomberg pricing that is a composite of exchanges. That takes the digital currency’s surge this year to more than 1 500% and its market capitalisation to $274bn. Coinbase prices reached $19 697 as of 11:23, before falling to $16 299 a half-hour later.
The latest rally comes on expectations that new bitcoin derivatives products expected to begin trading this month will boost mainstream demand. Some of the world’s biggest brokerages criticised those plans on Wednesday, telling regulators the contracts have been rushed to market without enough due diligence.
“This is irrational exuberance,” Royal Bank of Scotland Chairperson Howard John Davies said in an interview on Bloomberg TV on Thursday. “This is a very, very unusual market, that shows we’re not in a normal two-way trading market.”
Davies agreed with the brokerages’ concerns that exchanges which are set to offer bitcoin futures and options have failed to get enough feedback from market participants on margin levels, trading limits, stress tests and clearing.
Those warnings were laid out in an open letter via the Futures Industry Association on Wednesday.
Cboe Global Markets has said it will start trading bitcoin futures on December 10, while CME Group's contracts are set to debut on December 18.
Nasdaq is planning to offer futures in 2018, according to a person familiar with the matter. Cantor Fitzgerald LP’s Cantor Exchange is creating a bitcoin derivative, and start-up LedgerX already offers options.
ASX, the main exchange operator for equities and derivatives in Australia, on Thursday said it will start using blockchain, the technology that underlies bitcoin, to process equity transactions.
The digital currency also got a boost from a successful test of a technology that will attempt to ease congestion in purchases of the digital currency.
Lightning Network, a company behind the technology, is trying to move some transactions away from the blockchain by allowing buyers and sellers to transact privately and later broadcast their activity to the public network.
The price of bitcoin cash fell on the news, slumping 9.1% to $1 342.86, according to prices on coinmarketcap.com.
The cryptocurrency rival offers a separate solution to bitcoin’s congestion issue.