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Bitcoin Plunge from $20K Due to Futures, Fed
By Rebecca McClay | May 8, 2018 — 12:29 PM EDT
Bitcoin’s dramatic plunge from near $20,000 per U.S. dollar was linked to the launch of the futures market that allowed investors to short the digital currency, according to a report from the San Francisco Federal Reserve.
"The rapid run-up and subsequent fall in the price after the introduction of futures does not appear to be a coincidence," researchers said in the regional Fed bank's latest Economic Letter. "It is consistent with trading behavior that typically accompanies the introduction of futures markets for an asset."
Bitcoin reached near $20,000 in mid-December after remaining under $4,000 for about the first half of 2017. But when the Chicago Mercantile Exchange (CME) launched futures trading on bitcoin on Dec. 17, bitcoin hit a high of $19,783 on that day before seeing its value tumble. (See also: CME to Launch Bitcoin Futures.)
Read more: Bitcoin Plunge from $20K Due to Futures, Says Fed | Investopedia https://www.investopedia.com/news/bitcoin-plunge-20k-due-futures-says-fed/#ixzz5F1KM1Ab5
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