Bitcoin jumps after credit scare; Fidelity enters crypto sphere
Story by: AARON HANKIN
Bitcoin rose sharply Monday after a credit scare on a major cryptocurrency exchange created a rush for the No. 1 digital currency.
After beginning the day around $6,200, bitcoin BTCUSD, +4.32% traded to an intraday high of $6,960.68 on the Kraken exchange. However, on the Bitfinex exchange, the third largest cryptocurrency exchange by volume, according to CoinMarketCap data, the price of bitcoin traded to an intraday high of $7,788, creating a premium of more than 10%.
The move higher in bitcoin came at the expense of Tether (USDT), the stablecoin on the Bitfinex exchange, which traded to 88 cents. A stablecoin traditionally trades at or very close to $1 as it is a U.S. dollar backed coin that investors use to trade between different cryptocurrencies as opposed to going in and out of fiat.
“People were willing to pay more to get hold of bitcoin and get off USDT as worries circulated about credit risk,” said Charles Hayter, co-founder of CryptoCompare.
Tether has been closely scrutinized in the past whether it actually holds enough U.S. dollars in reserve to back its stablecoin.
In Monday trading, a single bitcoin was changing hands at $6,527.24, up 4.4% since Sunday at 5 p.m. Eastern Time on the Kraken exchange. While on Bitfinex, bitcoin was still trading at a premium at $6,908.
Bitcoin futures are tracking spot prices higher Monday. The Cboe Global Markets October contract XBTV8, +3.26% was trading 3.4% higher at $6,410, while the CME Group October contract BTCV8, +3.64% was up 3.6% to $6,405.
Fidelity to offer crypto services
Fidelity Investments said Monday it had launched a new company that will offer crypto trading and security offerings to clients.
The company, Fidelity Digital Asset Services LLC, will offer services to hedge funds, family offices and other market participants, according to a press release.
“Our goal is to make digitally-native assets, such as bitcoin, more accessible to investors,” said Abigail P. Johnson, chairman and CEO of Fidelity Investments in a statement.
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