Bitcoin Futures Crash CBOE Right When They Were Released

The price of bitcoin is sitting currently at $17,871.07 in US Dollars as it has stabilized over the course of a few days.

So, how did Wall Street greet Bitcoin and its future? Let’s see.

Bitcoin Futures contracts were released this past Sunday on CBOE, one of the biggest futures markets in the world, and saw an initial spike in interest.  There were a few trading halts to minimize potential friction in the marketplace. The sort of volume that they received was a bit different than what they expected. Contract dealers expected there to be much less traffic but saw the opposite. CBOE saw traffic that caused it to experience delays and minor processing halts in website operations.

The exchange listed its futures and had to pull back their operations within the time frame of three hours, due to the significant amount of trading that was going on.

Yet, representatives from CBOE have stated that there were no problems that stemmed from or affect the trading of the futures, it was just other aspects of the website that was experiencing issues.

The spot price, the current market price at which an asset is bought or sold for immediate payment, and delivery of bitcoin did rise, but this was expected by most, as many tied futures as a positive signal for bitcoin. There were some who stated the contracts would have a negative impact on the virtual currency, but that has not yet been witnessed as bitcoin holders and traders continue to find strength in the virtual currency and continue to push it up.

Some even commented that the contracts for bitcoin were even more volatile and wild than that of bitcoin itself.

This is only the first step for bitcoin, as there are still different barriers to trade. Some obstacles are capital requirements and the fact that not all brokers are providing support for these contracts.

As these problems are solved, bitcoin will be seeing more interest in their futures contracts as it is deployed on other exchanges like CME and Nasdaq. CME will be launching their contracts this coming Sunday and Nasdaq will be launching sometime in the first quarter of next year. This increased availability will truly show what will be the full expectations of the market for bitcoin as more people will be able to express their faith or lack of faith in the coin.


Remember, that these futures are settled in cash, which does have some effects on the nature of these trades. Regular futures are typically settled in the commodity that one is betting on, if one were betting on oil, that is what the settlement would be.  It makes it complicated when trading against the spot price because arbitrage doesn’t play the role it generally would, due to the difference in settlement.

Going Forward

CBOE will continue to have trading halts to make sure that market cools down as they have stated in their contract specifications.

As the market heats up, regulators will be getting further involved to make sure there is a certain amount of cooling to minimize potential risks, systemic or otherwise.

Meanwhile, investors like the Winklevoss twins are saying that bitcoin is still in its baby stages of growth in the marketplace and that futures are part of the introduction of bitcoin to the larger marketplace.

The twins, who founded Gemini exchange, said to Bloomberg:

“We think it’s the starting gun to a whole new phase of liquidity and price discovery and sophisticated entrance to the market.”

By | 2017-12-13T23:16:00+00:00 December 13th, 2017|News|0 Comments

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