Wall Street Traders Embrace Bitcoin, the Commodity

Wall Street Traders Embrace Bitcoin, the Commodity

Wall Street Traders Embrace Bitcoin, the Commodity


Bitcoin’s debut on Cboe (NASDAQ:CBOE) is a hit so far, with the price of the 1st-ever futures contract for the virtual currency rising 16% on the day. This paints a bright picture for other Cryptocurrencies and hot new ones like GBiT.

The futures contract that expires in January was up $2,440 to $17,900 Monday afternoon on the Chicago Board Options Exchange. Trading began Sunday, and the price rose as high as $18,850, according to data from the CBOE.

The CBOE futures do not involve actual Bitcoins, but they allow investors to make bets on the future direction of Bitcoin.

The 1st session of futures trading fit right in with the frenzy surrounding Bitcoin.

Traffic to the CBOE website was so heavy right after the start of trading that the site experienced outages. The exchange also halted trading 2X Sunday to stem volatility. The exchange operator has rules in place to stop trading after price swings of 10%.

Another large futures exchange, the Chicago Merc (NASDAQ:CME), will start trading its own futures on 18 December but will use a composite of several Bitcoin prices across several exchanges.

The price of a Bitcoin has soared since beginning the year below $1,000, hitting a peak of more than $16,858 on 7 December on the Bitcoin exchange Coindesk.

As of 12:30p CST, 11 December 2017, it was at $16,510 on Coindesk.

Futures are a type of contract in which a buyer and a seller agree on a price for a particular item to be delivered on a certain date in the future, hence the name.

Futures are available for nearly every type of security but are most famously used in commodities such as wheat, soy, gold, oil, cocoa and concentrated frozen OJ (orange juice).

The futures signal greater mainstream acceptance of bitcoin but also open up Bitcoin to additional market forces.

The futures will allow investors to bet that Bitcoin’s price will go down, aka shorting, which had been very difficult to do.

Many larger Wall Street brokerages and clearinghouses, including Goldman Sachs and JPMorgan Chase, are either not allowing customers to trade bitcoin futures or only allowing select clients to do so.

Other brokerages are putting restrictions on the amount of margin a trader can use in Bitcoin futures, or putting limits on the amount that can be purchased.

Interactive Brokers Group’s CEO expressed deep concerns about the trading of Bitcoin futures last month, saying “there is no fundamental basis for valuation of Bitcoin and other cryptocurrencies, and they may assume any price from one day to the next.”

Bitcoin is the world’s most popular virtual currency. Such currencies are not tied to a bank or government and allow users to spend money anonymously. They are lines of computer code that are digitally signed each time they are traded.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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