Bitcoin On Wall Street, Opens Strong
$BTCUSD, $CBOE , $CME $GBTUSD
Just 4 hours after its debut on Cboe Global Markets Inc.’s (NASDAQ:CBOE) Bitcoin futures, the contracts spiked more than 20% and triggered 2 trading halts designed to cool volatility.
Dealers said initial volumes exceeded expectations, while traffic on Cboe’s website was so strong that it caused delays and outages.
The exchange says all its trading systems were normal.
Bitcoin is currently trading at: 16,756.9355, -103.789, or -0.62% off its highs
The launch of futures traded on a regulated exchange is a watershed for Bitcoin, testing infrastructure that will make it easier for legions of professional traders and mainstream investors to bet on the cryptocurrency’s like the hotly anticipated GBiT, rise or fall, potentially helping to modulate its price.
Until now, trading in Bitcoin was driven mainly by individual investors who were willing to risk buying on mostly unregulated markets.
Some users of those little-policed venues have been targeted by hackers who’ve stolen digital tokens.
The exchange imposes circuit breakers to curb volatility, halting transactions for 2 mins if prices rise or fall 10%. Trading pauses for 5 mins at 20 percent.
Looking at the contract volume traded, we believe that there is a decent demand and this is driving up the price of Bitcoin. Prices are going higher because of the increase in confidence.
Once the markets are better established, professional traders will arbitrage between the Cboe and CME futures and bitcoin itself, improving pricing efficiency.
Some people who would like to trade futures are having a hard time accessing the market because not all brokers are supporting it initially.
Participation may also be limited because of higher capital requirements and tighter risk limits, See said.
YTD, Bitcoin is up more than 1,600%.
The surge has been driven largely by demand from individual investors, even as technical obstacles kept out big money managers.
Derivatives trading is the culmination of a meteoric year for Bitcoin, which captured imaginations and investment around the world, driven by its huge gains and its anti-establishment mission as a currency without the backing of a government or a central bank.
The derivatives contracts should push Bitcoin into the realm of regulators, banks and institutional investors.
Both Cboe and CME on Dec. 1 got permission to offer the contracts after pledging to the U.S. Commodity Futures Trading Commission that the products don’t run afoul of the law, in a process called self-certification.
Cboe’s futures are cash-settled and based on the Gemini auction price for bitcoin in USD. Margins for the contracts, which will be cleared by Options Clearing Corp., will be at 40% or higher.
$GBTUSD should be released in the next 2 weeks.
Have a terrific week.