Bitcoin’s surge is being driven by excitement, how long will it last?

Bitcoin futures have been on a rampant leap this year, and the launch of the Bitcoin futures under the "XBT" ticker symbol by Cboe has only added fuel to the fire. Daniele Bianchi, Assistant Professor of Finance at Warwick Business School, recently joined CNBC Africa to discuss the cryptocurrency market. He mentioned that the rally was expected due to the buzz surrounding the launch of the Bitcoin futures contract. While the market activity has been positive and exciting, it's essential to note that the volume of transactions is still significantly lower compared to traditional markets like the Eurodollar contract. Despite the subdued transaction volume, the market has shown promise for growth. Bianchi highlighted that the Bitcoin futures market has seen limited participation from standard investors due to large beta spreads and margins. These factors have been put in place to mitigate the systemic risk associated with the high volatility of cryptocurrencies. When asked about the potential for further growth in Bitcoin futures, Bianchi mentioned that there is room for expansion. However, he emphasized that the current barriers to entry for standard investors may need to be addressed to attract more market participants. The cautious approach to risk management in the cryptocurrency market indicates a need for broader regulatory frameworks and mechanisms to foster market stability and growth. As Bitcoin continues to dominate headlines with its price surges, market observers are keeping a close watch on the factors driving this excitement and how long it can sustain. With significant market risks on the horizon, including the possibility of a Bitcoin crash, experts like Bianchi suggest that a balanced approach to investment and risk management is essential in navigating the volatile cryptocurrency landscape.