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Dec. 11 (NBD) -- Bitcoin, the digital currency based on blockchain technology, exploded in price last week, first breaking 15,000 U.S. dollars per coin last Thursday and then shooting upward to 19,400 U.S. dollars last Friday, according to data from okcoin.com, a global bitcoin exchange.

The price of bitcoin was around 1,000 U.S. dollars per single coin at the beginning of 2017. It has since gone up exponentially.

A professional from an overseas trading platform told NBD that the price rises benefit from the bull news that the bitcoin futures is to start trading on Chicago Board Options Exchange (CBOE) and Chicago Mercantile Exchange (CMF) on Dec. 10 and Dec. 17, respectively.

The professional believed that the bitcoin price hadn't yet reached its peak and it was hard to predict when the peak would arrive. It was unlikely that the price would plummet suddenly, either, the person added.

According to the above-mentioned professional, since bitcoin transactions in renminbi are not allowed in China, many exchange platforms seek overseas business and conduct transactions in U.S. dollars. In addition, customers can buy bitcoin via Over-The-Counter (OTC) trading.

China's cryptocurrency exchange Huobi and Japan-based investment group SBI announced last week their plan to launch a pair of cryptocurrency exchanges. Sometime early 2018, the two exchanges, dubbed "SBI Virtual Currency" and "Huobi Japan", will start to offer yen-denominated cryptocurrency services, according to a statement made by Huobi.

Xiao Lei, a senior analyst of digital currency, said to NBD that huge capital inflow from global speculators are likely pushing the continuous increase of bitcoin on a basis of a large market value which bitcoin has achieved. Data from CoinMarketCap shows that the market value up to date of bitcoin stands at 283 billion U.S. dollars.

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Xiao agreed that the launch of bitcoin futures on CME, the world's largest regulated FX marketplace, brings positive effects to the bitcoin market. Previously global investors were concerned about the regulatory issues of bitcoin and the safety of spot transactions for its liquidity, but the bitcoin futures on CME encouraged confidence among the investors, Xiao added.

Earlier this month, CME Group announced its plan to launch bitcoin futures contracts. CME Group Chairman and Chief Executive Officer Terry Duffy at the time commented, "We are pleased to bring Bitcoin futures to market after working closely with the CFTC and market participants to design a regulated offering that will provide investors with transparency, price discovery, and risk transfer capabilities."   

At launch, new Bitcoin futures contract offered by CME Group will be subject to a variety of risk management tools, including an initial margin of 35 percent, position and intraday price limits, and a number of other risk and credit controls, according to the news release of CME Group.

Wang Yongli, vice president of China International Futures Co., Ltd., revealed a different idea in an article, writing that the launch of bitcoin futures brings bitcoin trading under management and regulation, which doesn't necessarily push a sharp price rise.

Wang thought that the dramatic variations in bitcoin prices conform to the properties of futures transactions. The real-name mechanism of futures trading entails rigid requirements on the legitimacy of capital, and the futures contracts can be closed through reverse hedge at the delivery date without involving the actual commodity delivery.

He further explained that therefore, when bitcoin futures arrive at the exchanges, the trading is cut free from the limitations of the actual delivery of bitcoin, which allow more players to participate and find the "reasonable price" that is in line with most people's expectation.  

The above-mentioned professional of an overseas trading platform suggested that the investors need to know the technology and history concerning blockchain and digital currencies, considering the high yields and great risk coexisting in the market of digital currencies.

Email: gaohan@nbd.com.cn