Bitcoin hits another record with $20,000 in sight

But currency exchange operators report problems with service through their websites, frustrating traders seeking to cash in

A bitcoin crypto currency shop in Rovereto, northern Italy. The cryptocurrency could well top $20,000, analysts say. Pierre Teyssot/AFP

The virtual currency bitcoin hit another all-time peak on Tuesday, two days after the launch of the first ever bitcoin futures on a US exchange and ahead of the start of another futures contract next week, as investors grew optimistic that the US$20,000-mark is within reach.

On Sunday, Chicago-based derivatives exchange Cboe Global Markets launched  bitcoin futures, enabling investors to get exposure to the currency via a large, regulated exchange.

The CME Group is expected to launch its futures contract on December 17.

"We're going to see  bitcoin emerge as a payment network," said Trevor Koverko, chief executive officer of Polymath, a securities token platform.

"Currently  bitcoin is being used as a speculative asset and store of value. But as scaling solutions ... emerge,  bitcoin's utility dramatically increases along with its price," Mr Koverko said.

Bitcoin, the world's biggest and best-known cryptocurrency, was quoted at $17,310 on the Luxembourg-based Bitstamp exchange , up 5.1 per cent on the day. Earlier on Tuesday bitcoin hit a record high of $17,428.42, registering an approximately 20-fold increase in its price for the year as it drew in millions of new investors.

At 8.55am UAE time, bitcoin had retreated to 16,389 on the cryptowatch site.

A Reuters technical analysis that measures the ups and downs in trading prices, known as waves, showed bullish momentum for  bitcoin.

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The technical analysis suggests an extension of a wave, which could mean that  bitcoin would easily surge above the psychologically important level of $20,000, according to the Reuters analysis.

"It's remarkable how back in November $10,000 seemed like a psychological end-of-year target," said Lukman Otunuga, research analyst at FXTM. "With the current gravity-defying bullish momentum, it may be no surprise if bitcoin concludes 2017 on $20,000.

But as bitcoin set a new record, digital currency exchange operators Coinbase and Bitfinex reported problems with service through their websites on Tuesday, frustrating traders seeking to cash in on the latest surge in the value of  bitcoin and other cryptocurrencies.

The newly launched one-month bitcoin futures on the Cboe Futures Exchange were slightly tepid, with prices generally steady and volumes about a third of those seen on Monday. Bitcoin futures maturing in January were at $18,450, with just 1,416 contracts traded as of late afternoon in New York, compared with 3,956 contracts on the first day.

A total of $26.4 million was notionally traded so far on Tuesday, compared with around $73m on Monay.

"The trading volume was huge yesterday as  bitcoin price fluctuated in a wide range over the weekend," said Park Nok-sun, a cryptocurrency analyst at NH Investment and Securities in Seoul.

"Now that the exchange price is relatively calm, it is obvious for futures trading volume to fall."

While market participants are still heavily divided over the digital currency's utility, value and safety, they expect the futures contract to offer a legitimate means for institutions to bet on  bitcoin. Some investors even expect the futures will offer markets an easier means to take short positions on the cryptocurrency.

The futures are cash-settled contracts based on the auction price of  bitcoin in U.S. dollars on the Gemini Exchange, which is owned and operated by virtual currency entrepreneurs Cameron and Tyler Winklevoss.