Investing.com - Bitcoin Cash surged around 70% to all-time highs on Wednesday after San Francisco-based bitcoin exchange Coinbase announced that it would open up the possibility of trading the Bitcoin offshoot to its clients.
Bitcoin Cash is the result of a “fork” from the world’s largest digital currency by market cap, Bitcoin, on August 1 in a move that was designed to be able to process transactions more quickly at a lower cost.
Originally, Coinbase had initially said it would not support the offshoot, but today’s announcement should come as no surprise to market followers.
The exchange quickly backtracked and announced on August 3 that it would embark on trading by January 1.
Bitcoin Cash has become a popular alternative to its parent Bitcoin and is now the third largest digital currency with a market cap of $58.3 billion.
Wednesday’s huge move has not been without its drama as accusations were leveled at the exchange of insider trading, following a sharp increase in its price just hours before the announcement of support was made.
"If we find evidence of any employee or contractor violating our policies — directly or indirectly — I will not hesitate to terminate the employee immediately," Coinbase Chief Executive Brian Armstrong said in a blog post.
Separately, Coinbase looked to assure its clients via Twitter that the firm’s employees had been “prohibited from trading in Bitcoin Cash for several weeks”.
On the Bitfinex exchange, Bitcoin Cash surged 74.35% or 1599.20 to $3,750.00, by 9:56AM ET (14:56GMT) just off the intraday record high of $3,772.80.
Meanwhile, its “parent” Bitcoin slumped 9.27%, or $1,754.00, at $17,160.00. The digital currency -that trades 24 hours a day, 7 days a week- continued to pull back from an all-time high of $19,891.00 reached on Sunday what is its third day of declines.
The downturn coincided despite the hype behind the fact that the Chicago Mercantile Exchange (CME) launched its own Bitcoin Futures on Sunday following rival CBOE’s own version just a week earlier.
The launch of futures trading has drawn a mixed reaction from investors, as it provides market participants with the option to place bearish bets on bitcoin, which could pressure the price of digital currency.
Other market participants believe, however, that the launch of futures paves the way for bitcoin to become an established asset class, which would spur institutional demand.
Some traders suggested that recent declines were due more to profit-taking as investors sold on the actual launch of the CME futures contracts. Other experts said that the largest digital currency, with a market cap of $286.66 billion, still boasts year-to-date gains of around 1,700% was long overdue for a correction.