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Futures Are Here: CBOE Launches Bitcoin Futures Trading

What happened

Cryptocurrency market celebrated a historic moment on Sunday. Chicago Board Options Exchange (CBOE) was the first to launch Bitcoin futures. It gained lot of buzz both on Wall Street and in crypto community.

Can you run me through it again?

Long story short, futures are a derivative financial product which allows to fix the price to buy an asset on a certain date in the future. Investors value futures for minimizing the risks from monster rallies – both upside and downside.

Why is it important

  • It’s the first crypto derivative – and it trades on traditional finance platform.
  • In the light of the recent Bitcoin price jumps (LINK), crypto investors welcome a product with some level of certainty.
  • It’s a strong signal of Bitcoin adoption by traditional financial markets.
  • However, some fear that Bitcoin will lose its grounds with microinvestors – futures are mainly attractive for the large institutional investors.Ok, I remember now. So how did it go?
    Oh, you should have been there. Market was so hyped that CBOE website crashed within minutes after launch. According to the Japanese reporter Yuji Nakamura, by the end of Sunday, $18M was traded via CBOE futures (https://goo.gl/tyze65).
    Futures trading began at 5 PM Central time at a price of $15,000. After a few hours, futures expiring in January 2018 were trading at $18,500. The price of Bitcoin itself is highly volatile since yesterday, but tends to retract to around $15K from both sides (https://goo.gl/uRCiGQ).
    Financial Times mentions 2700 futures contracts changing hands now (https://goo.gl/DSSMpj).What can we learn from it
  • Technical glitches will be there – at least, for now. The demand for crypto and its derivatives is so high that CBOE situation might happen on other stock exchanges.
  • Despite a huge interest, investors are still cautious about Bitcoin futures. Many analysts note that futures trading in only a drop in the ocean of Bitcoin trading on crypto exchanges.
  • Largest futures brokers, JPMorgan, Citigroup and Societe Generale, did not participate on Sunday. Will be curious to see if they join today.
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