CBOE bitcoin futures surge 20% to $18’700
Trading of the Chicago bitcoin futures commenced at 5pm CET on Sunday, or Midnight European time. Almost all the action was in the January future.
Trading in the first few minutes was volatile with a sharp spike of around $1000 followed by a sudden plunge of around $600.
After trading at a low of $15’420 the price started to climb. Professionals and amateurs alike saw an opportunity as the price seemed to stabilise at around $1000 above the Gemini spot price. They accordingly took out short positions to profit from the arbitrage.
This strategy seemed to backfire as the January futures price resumed it ascent. 5 hours after trading commence the premium above spot had climbed to over 10% with the January future at $18’400 compared to the Gemini spot of $16’700. As the price rose some traders bought back their short position driving the price higher to a peak of $18’700. The price has since fallen back to $18’200, compred to the Gemini spot price of $16’600, which means the future isvaround 10% higher than the spot.
Volume was light compared to the crypto exchanges and compared to other CBOE futures products. After 5 hours and 15 minutes 2081 contracts representing 2081 bitcoin had been traded. In comparison Gemini reported volume 14’500 bitcoin and Bitfinex reported volume of 100’000 bitcoin.
Does this premium above spot mean that the bitcoin price will be driven higher? Probably not on its own. The futures are cash settled and nobody needs to buy bitcoin to settle. However there is a psycological effect. If the futures traded at a premium to spot then it shows a lot of latent demand, which will, over time, translate into actual bitcoin purchases. However the future price should fall towards the spot price bearing in mind, spot is where the real action is.
After 5 hours and 15 minutes of trading, the January futures were trading at $18’530, up over $3000.
Here’s the chart.
Thank you for the very instructive article. I very often heard the word futures and could not understand what it was. And so, this article woke my curiosity, and I looked in Wikipedia - https://en.wikipedia.org/wiki/Futures_contract.
Here I first learned that this is just a contract, fixed by some kind of asset. In our case it is bitcoin.
After that, I understand that the price of 18.5 thousand dollars is just the beginning of its growth. The very fact that it began to trade on securities exchanges, inspires people its value. Further all by the standard scheme, we believe more in its value - it becomes more valuable.
The net effect is that bitcoin is now, for the average American, just a phone call away. No complicated software or dodgy foreign exchanges to deal with.
Thank you for mentioning, I missed this moment. Now, especially, I will wait for the growth of the bitcoin price
Bitcoin per day high and low price. Thx for nice post.
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https://steemit.com/steemit/@miti/newcomers-minnows-and-spammers-this-post-will-save-your-reputation
before hurting your reputation - what reputation...
the question is is wall street ready for bitcoin. the way i see it wall street is fuel adding to the bitcoin fire
It will be interesting to see how futures trading works with a crypto that is volatile like this. I can't think of anything that compares. This can only help bitcoin with further popular integration as the future will undoubtedly be on programs regularly. Its fascinating as well because we are watching the future of currency develop in front of us!
Thank for keeping sharing news about btc :)
There's been so much FUD about how institutional money will impact the price of Bitcoin. I think this will also set the tone for CME next week. Exciting futures ahead :)
So basically what we have is bunch of people making bets on other people's bets. Correct me if I'm wrong. When things are going well, they'll party. But with scaling problems, lack of privacy and speed BTC is bound to hit a wall. BTC is far volatile than traditional investments. I have a feeling that someone is asking to get burnt.
The value of Bitcoin will now go crazy, they will just jump to the star.
Thank you for the wonderful analysis and comparisons, you are very detailed and precise @swissclive
Traders was full of expectation for this opening .... that in the early stages of trading the Cboe platform was inaccessible. Then came what everybody expected... the price has gone up.
I think that volumes are too low and it's too early to draw a conclusion.