“Futures on the world’s most popular cryptocurrency surged as much as 25 percent during their debut session on Cboe Global Markets Inc.’s exchange, triggering two temporary trading halts meant to cool volatility. Dealers said initial volumes exceeded expectations, while traffic on Cboe’s website was so strong that it caused delays and outages.” Bloomberg
Bitcoin is one step closer to becoming a part of the mainstream financial world. Cboe is launching the first US bitcoin futures exchange at 6PM Eastern, giving speculators a chance to bet on the value of the cryptocurrency through a listed (XBT), regulated entity. You don’t use a digital wallet or otherwise require bitcoins — instead, you trade and settle futures contracts using cash, with a $10 minimum price interval and a $1 transaction fee from January onward. There aren’t any price limits, and you can short your futures (that is, immediately sell them in hopes of turning a quick profit) if your broker allows it.
The launch on Sunday night may have caused an early outage of the Chicago-based CBOE Global Markets’ (CBOE.O) website. The exchange said that due to heavy traffic on the CBOE Global Markets website, the site “may be temporarily unavailable.”
The one-month bitcoin contract <0#XBT:> opened trade at 6 pm (6.00 p.m. ET) at $15,460, dipped briefly and then rose to a high of $18,700.
As of 0430 GMT, it was up 16 percent from the open at $17,940, with 2,211 contracts traded.
Bitcoin rallied as the futures launched. The digital currency traded more than 9 percent higher above $16,400, according to CoinDesk’s Bitcoin Price Index. The index tracks prices from digital currency exchanges Bitstamp, Coinbase, itBit and Bitfinex.
The new futures contract, which expires in January, traded more than $2,000 higher at $18,490, up 19.6 percent as of 11:18 p.m., ET. The futures had briefly turned negative at about 6:55 p.m. New York time before bouncing back.
“Bitcoin’s market capitalization is currently around $240 billion, which is much smaller, say, than the value of gold outstanding,” said Andrew Kenningham, economist at Capital Economics.
“If the price of bitcoin fell to zero today, the paper losses would be equivalent to a 0.6 percent fall in U.S. equity prices. As most investors have bought bitcoin at much lower prices, the relevant losses would arguably be smaller.”
Asian shares were buoyant following strong U.S payrolls data and better-than-expected Chinese trade data on Friday.
The MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.4 percent, staying well above a recent two-month trough of 542.27 points.
Japan’s Nikkei .N225 added 0.4 percent while Chinese shares rallied, with the blue-chip CSI 300 index .CSI300 up 0.9 percent. Hong Kong’s Hang Seng index .HSI gained 0.5 percent.
According to executives from the firm, CBOE is hoping that the futures launch will lead to other products and services centered around cryptocurrencies, including a possible shift into exchange-traded funds and notes – provided that the SEC gives its approval.
Nasdaq Inc plans to launch a futures contract based on bitcoin in 2018, making it the third exchange operator to plan U.S. derivatives contracts linked to the digital currency, a source with knowledge of the matter said on Wednesday.