Fluctuating costs of transaction fees appear to play “a major role in determining price corrections,” and there are “ominous signs” that it could drive another bitcoin price crash, according to the CME group.
Transaction fees are those paid to bitcoin “miners,” and they have risen dramatically as the demand to make high-value transactions has risen and miners prioritise transactions with higher fees.
LONDON — An exchange group which plans to launch Bitcoin futures says there are “ominous signs” that rising transaction costs could cause the volatile cryptocurrency to drop in value.
US-based CME Group will begin offering a trade in bitcoin futures contracts later this month, making it one of two major exchanges which will allow speculators to bet on bitcoin’s price moving down as well as up. The move has been taken as a sign of rising interest in bitcoin from institutional investors.
CME Group said on Wednesday that the fluctuating costs of bitcoin transaction fees appear to play “a major role in determining price corrections,” and warned that the market might struggle to cope if the fee paid to purchase bitcoin rises much further.
Erik Norland, executive director and senior economist at CME Group, said that transaction costs are showing “ominous signs” …read more
Source:: Businessinsider – Finance