The Japanese cryptocurrency exchange bitFlyer picked a good day to expand to the United States.
With bitcoin bumping against a new all-time high price of $10,000 — it has broken through on some foreign exchanges, though not yet in U.S. markets — bitFlyer, the world's largest bitcoin exchange by trading volume, opened its doors on Tuesday to American traders and institutional investors.
It hopes to serve a rarefied user base: professional traders who buy and sell $100,000 or more in digital currency each month. To that end, bitFlyer's U.S. exchange offers sophisticated trading tools and an application programming interface for programmatic traders, according to a press release.
Both bitcoin's string of record-setting highs — it took barely a week to climb from $8,000 to $9,000 — and the U.S. expansion of bitFlyer, which has processed more than $100 billion in digital currency trades this year alone, are accelerating cryptocurrency's rapid shift into the mainstream, despite the banking industry's fears.
By early 2018, the company plans to add support for other cryptocurrencies such as litecoin and Ethereum as well as Bitcoin Cash and Ethereum Classic, which are alternative versions of their namesakes.
The company's expansion "addresses a huge unmet need in the U.S. by institutional traders looking to access large amounts of liquidity," Bartek Ringwelski, the U.S. exchange's chief operating officer, said in a news release. "Through our web interface or API, approved professional traders can be up and running and making trades in a matter of minutes."
So far the exchange has been approved to serve customers in 42 states, including New York, whose BitLicense regulatory regime has been controversial for excluding most digital-currency companies from operating in the state.
But the institutional investors bitFlyer is targeting with its U.S. exchange are more likely to see it the way bitFlyer CEO Yuzo Kano sees it, as "a nod of approval from one of the most influential state financial services regulators in the nation."
The Japanese exchange operator is only the fourth company to be granted a BitLicense. The stringent application process "ensures only the most safe and compliant firms can operate in New York," Kano said in a NYFDS news release on Tuesday.
The company's launch timing could hardly be better. The price of bitcoin has raced upward, on Tuesday morning breaking the $10,000 mark on some exchanges for the first time ever, an increase of 900% since the year began.
Entrepreneurs and institutions have taken notice. More than 100 hedge funds have been created expressly to trade bitcoin, Ethereum and similar digital assets.
Just over 53% of Americans who have invested in bitcoin believe more market participation from financial institutions would send the price still higher, according to a November LendEDU survey.
Some observers have been warning of a bubble since early summer, but the market for bitcoin and other digital assets has only continued to grow, increasing in value from less than $18 billion on January 1 to some $310 billion today. (Part of the increase has been due to new digital assets launching.)
The sky-high profits are attracting wild speculators and savvy traders alike.
There is "a strong demand for leverage in the space," Adam White, general manager of the digital-currency exchange GDAX, said at CoinDesk's Consensus Invest conference on Tuesday. He was referring to the practice of borrowing capital in order to place large bets in the market.
Coinbase, GDAX's parent company, wants to relaunch the margin trading feature on the exchange, he added.
Even if the cryptocurrency market is in a bubble, experts say it could be far from popping.
Bitcoin rising to $10,000 "only suggests that there are more assets available for speculation in the market than previously forecast," said Lee McKnight, who teaches a course on blockchain management as an associate professor in the School of Information Studies at Syracuse University. "Since bitcoin amounts to less than a $200 billion market, my assessment is that there is room, and lots of idle cash and virtual market frenzy, to fuel its continued rise."