Bitcoin's rebound from its July low lacks an important feature of previous markets: leverage.
Cryptocurrency traders have not increased leverage as significantly as they have in the past. The spread between Bitcoin futures and spot prices shrank in February, when the cryptocurrency was surging and eventually hitting an all-time high, suggesting that demand for bulls to increase leverage remains low.
FRNT Financial's Stephane Ouelette points out that this may imply two things-the first is that traders are not convinced that Bitcoin's return above $46000 is a real breakthrough. But in Ouelette's view, judging from the trajectory of past gains, it is more likely that leveraged accounts are not involved-if they do, this will make the latest wave of $100000 price forecasts more likely.
"We think the leverage part of the rally will emerge later," Ouellette, co-founder and CEO of FRNT, said on Bloomberg's "QuickTake Stock" streaming program. "if so, the $100000 target is very reasonable. The last time we saw this almost unleveraged situation, we were less than $20, 000, and leverage did not jump in until Bitcoin rose to $40, 000, boosting its price to $65000.
Bitcoin has climbed steadily recently, rising in five of the past seven trading days and breaking key levels. At one point on Friday, Bitcoin rose 4.9% to $46679. It has risen about 50% since it fell below $30, 000 this summer and hit a recent low.