Bitcoin futures just started trading on CBOE yesterday at 5 PM CST, immediately spiking the cryptocurrency’s value by about 10 percent.
On Sunday, the Chicago Board Options Exchange (CBOE), the world’s largest futures exchange, launched its very first Bitcoin futures (XBT) contracts that seemingly fueled the market’s current obsession with the cryptocurrency. In a statement, Ed Tilly, the Chairman and CEO of CBOE, was quoted as saying:
“Given the unprecedented interest in Bitcoin, it’s vital we provide clients the trading tools to help them express their views and hedge their exposure. We are committed to encouraging fairness and liquidity in the Bitcoin market. To promote this, we will initially offer XBT futures trading for free.”
However, just a few moments after the launch, CBOE’s website went down due to significant traffic according to a Twitter message by the company yesterday.
“Due to heavy traffic on our website, visitors to http://www.cboe.com may find that it is performing slower than usual and may at times be temporarily unavailable. All trading systems are operating normally,” the tweet said.
Due to heavy traffic on our website, visitors to https://t.co/jb3O722hoo may find that it is performing slower than usual and may at times be temporarily unavailable. All trading systems are operating normally.
— Cboe (@CBOE) December 10, 2017
While the downtime hindered Bitcoin trading for a short moment, it was not able to stop the surge in the price of the cryptocurrency which jumped from around $14,500 USD to near $16,000 USD. Bitcoin is currently trading at approximately $16,500 USD as per Coindesk.
The Bitcoin futures contracts will allow visitors to bet on the price of the virtual currency in the span of one to three months. According to reports, the contract was the most-traded in the history of CBOE Global Markets exchange.@CBOE launches #Bitcoin futures contracts, Bitcoin value immediately spikes!Click To Tweet
Bitcoin Futures: Reshaping the Future of Bitcoin Trading
Bitcoin futures began trading yesterday at a price of $15,000 USD, reportedly matching the price of one Bitcoin on the Gemini Exchange. Right now, XBT contracts expiring in January 2018 are trading at $17,880 USD while those expiring in February are priced at $18,800 USD.
2,812 contracts have traded for the January settlement date as of press time, 14 for February, and 50 for March.
The surge in the price of Bitcoin has already triggered two circuit breakers and might potentially trigger a third. The so-called circuit breakers were implemented by CBOE to give traders the opportunity to pause and reconsider their options should there be any significant trade price movement.
Apparently, any gain or loss of more than 10 percent triggers a two-minute stop to trading, while price move amounting to 20 percent or more will trigger a five-minute trading pause.
The launch of Bitcoin futures on CBOE is expected to be followed by similar offerings from the likes of CME Group Inc. and Nasdaq Inc. The debut of cryptocurrency on the Wall Street would make it easier for mainstream investors to bet on its rise or fall.
With the futures contracts now in the market, proponents of the regulated Bitcoin derivatives believe that it will boost the digital currency’s liquidity and market transparency. Some of the big names who opposed Bitcoin include JPMorgan Chase’s CEO Jamie Dimon and billionaire investor Warren Buffet.
If you want to know what the other wolves of Wall Street are thinking about Bitcoin, click here.
Right now, XBT contracts are only accounted for a small portion of the billion dollar Bitcoin-related transactions happening worldwide. For its first eight hours, XBT contracts traded a total of $40 million USD. Just a mere three percent of the $1.2 billion USD Global Bitcoin trading recorded at the same time.
People interested in trading Bitcoin futures are still having a hard time accessing the market due to the fact that not all brokers are supporting it. Aside from that, the issue is also being fueled by higher capital requirements and tighter risk limits.
“We’re in the early stages here, and there’s not enough professional liquidity from the big market makers who can provide depth and hold in the movements,” Oanda Corp Asia Pacific Head of Trading, Stephen Innes, explained.
“It’s going to be a learning curve.”
CBOE is now hoping that the launch of Bitcoin futures contracts will potentially lead to other products and services centered around cryptocurrencies, including a possible shift to the SEC-approved exchange-traded funds and notes.