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article imageBitcoin futures launch volume causes website problems

By Ken Hanly     Dec 11, 2017 in Business
The Chicago Board Options Exchange (CBOE) launched its first bitcoin futures contracts at 6 PM Eastern Standard Time this Sunday evening December 10.
Too much traffic at launch
The website of CBOE became unavailable just as the bitcoin futures contract was launched. CBOE blamed the downtime on the heavy traffic. However, the incident also happened at the same time as a sudden jump in the price of bitcoin. It went from $14,509 at 22.59 Coordinated Universal time (UTC) to $15,732 at 23:06 UTC.
First future contract sales
The first contracts will expire on January 17th 2018 with other contracts to expire on March 14th. CNBC claims that 672 January contracts had been sold as of 7:10 PM with CNBC reporting the price at $15,800.
A Reuters report said that trading opened at $15,460 but then leaped to a high of $17,000 on Monday (UTC). When the Reuters article went to press the price was quoted at $17,120 a premium of one thousand dollars over its price on the Gemini exchange.
The futures are cash-settled contracts based on the auction price of bitcoin in U.S. dollars on the Gemini exchange. The Gemini Exchange is owned and operated by the cryptocurrency entrepreneurs Cameron and Tyler Winklevoss.
Today's launching may be a sign of more future developments
The launch of the futures trading allows investors to bet for or against the bitcoin price without buying or selling the coin.
A further development slated for next week is the launching of futures trading by the huge Chicago Mercantile Exchange (CME).
There is hope that the future trading will lead to the revival of pressure for development of a bitcoin exchange-traded fund (ETF).
Edward Tilly CEO of the CBOE said that the exchange could use information from the futures trading to make a case before the Securities and Exchange Commission (SEC) to allow the development both of bitcoin-linked ETS but also exchange-trade notes (ETNs)
ETFs are tradeable securities linked to an index, commodity or basket of assets and can be purchased by retail investors. People who are attracted to bitcoin due to its price gains might find the ETFs appealing since they would not involve the hassles and the risks involved with storing the coin and securing it.
Earlier this year, the SEC rejected an attempt by Gemini to start an ETF. One SEC concern was the lack of other regulated bitcoin products. However the bitcoin futures trading will be regulated by the Commodity Futures Trading Commission. Another attempt to start an ETF could be looked on more favorably.
Tilly said: "All of that information goes into building the next steps. One of those potential next steps would be moving into ETFs and ETNs that would take SEC approval."
Price of bitcoin recovering
After reaching a low of around $13,300 yesterday, the price of bitcoin climbed back up and opened on Monday about four hours ago at over $15,000 but as I write this it is now at about $16,300 a gain of well over $1,200 in four hours. Volatility appears to persist for now.
More about CBOE, bitcoin futures, exchange traded funds
 
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