FTSE hits 5-week high; CME launch Bitcoin futures
This content has been created by X-Trade Brokers Dom Maklerski S.A.
Stocks in London have began the last full trading week of the year in a bullish mood with the FTSE 100 higher by around 25 points and moving back above the 7500 level. The Pound is also higher with Sterling holding above a key technical support level around 1.33 against the US dollar and now looking to move higher into year-end.
Santa Rally starting early?
The propensity for stocks to rise in the week between Christmas day and New Year’s has been widely observed in markets for some time now, with the phenomenon dubbed the Santa Rally. December on the whole has also seen above average returns for equities with the month being the second best performer for the FTSE over the past decade with a combination of year-end repositioning amongst funds, Christmas bonuses invested in stocks and light volumes seen as contributory factors to the rise. The blue-chip index is now just over 1% from its record high of 7600 and given the positive seasonality effects and upbeat global risk sentiment there is every chance we see the market move into uncharted territory before the year is out.
CME launch Bitcoin futures
The world’s largest derivatives exchange has successfully launched its Bitcoin futures with the CME product going live last night. The move comes just a week after smaller crosstown rival, the CBOE, conducted its own launch and there are many who believe these events provide a further layer of legitimacy to cryptocurrency market. Bitcoin volumes on both exchanges remain extremely light compared to their more widely traded contracts such as S&P futures or Crude Oil and it’s quite clear that there hasn’t been a rush of institutional money surging into Bitcoin just yet.
The price of the front-month contract hit a high of 20865 in early trade and the futures continue to trade at a notable premium to the spot - a market state now as contango which due to the roll yield is deemed by many to be more conducive to short positions than long. Total cryptocurrency market capitalisation has now almost reached $600B after starting the year around the $20B mark. Warning signs in these market remain plentiful but for now their rise has shown little sign of abating. The gains seen year-to-date are quite remarkable in terms of both speed and size, but it is always worth remembering that should the bubble burst the ensuing pace of the sell-off will make the moves higher look pedestrian.
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