Futures on Bitcoin surged as much as 26 percent in their debut session on Chicago Board Options Exchange (CBOE) Global Markets Inc.’s exchange, triggering two temporary trading halts designed to calm the market.
Bitcoin futures expiring in January were 20 percent higher at $18,040 as of 9:50 a.m. in New York from an opening level of $15,000, on 3,051 contracts traded.
Bitcoin spot price was at $16,627.80 on the Coinmarketcap index, as at the time of going to press. Volumes traded also reached an all-time high in Nigeria at N1.893 billion on the coin.dance index.
The website of CBOE went blind several times on Sunday shortly after it launched bitcoin futures contracts for the first time.
CBOE however assured that trading on other exchanges continues as “intermittent website delays” will have no effect on the trading activity.
“Last night, CBOE XBT Bitcoin Futures commenced trading on the CBOE Futures Exchange,” Russell Rhoads, from CBOE stated in a blog post on the company’s website. “The launch was smooth, although our website experienced some issues due to an overwhelming number of hits looking for the trading data.”
Initial futures contracts that traded in Chicago were on crops such as corn or wheat. Rhoads noted that farmers could use futures to lock in a selling price before they even planted their crops for the grown season.
“Bitcoin futures allow market participants the ability to lock in a selling price for bitcoin as of a future date,” Rhoads said.
Rhoads also noted that CBOE has witnessed an unprecedented volume of trading within three hours of launch.
“On the first day of trading at CBOE in 1973, 911 options (were) traded. First day of $VIX futures in 2004 saw 461 contracts traded. Three hours into the first bitcoin futures session and volume is just over 1,000 contracts,” Rhoads said.
Traders stand to benefit as it will bring greater transparency, efficient price discovery, deep liquidity and centralised clearing. XBT futures provides a centralised marketplace for participants to trade based on their view of bitcoin prices, gain exposure to bitcoin prices or hedge their existing bitcoin positions.
CME Group – CBOE’s rival, will also launch its bitcoin futures on December 18 while New York-based Nasdaq is expected to launch early next year.
Both Cboe and CME on Dec. 1 got permission to offer the contracts after pledging to the U.S. Commodity Futures Trading Commission that the products don’t run afoul of the law, in a process called self-certification.
The entry of these big three exchanges according to experts could make a bitcoin ETF possible.
A bitcoin ETF also known as bitcoin exchange traded fund gives individual investors an opportunity to invest over the long-term in bitcoins without the need to buy the bitcoins directly. It also eliminates the hassles of managing digital wallets. Short term traders can bet their money on short-term price moves of bitcoin ETF units and attempt to benefit from trading profits.
For now, Cboe futures account for a tiny slice of the world’s bitcoin-related bets. The notional value of contracts traded in the first eight hours totalled about $40 million. Globally, about $1.1 billion of bitcoin traded against the U.S. dollar during the same period, according to Cryptocompare.com.