Bitcoin hits $15,058 as Futures trading brings legitimacy
Bitcoin could be moving into a new era of legitimacy as the Chicago Board Options Exchange (CBOE) Inc. says it will start trading bitcoin futures on December 10th a week ahead of the start of trading of the cryptocurrency on CME Group Inc, scheduled for the 18th of December.
Meanwhile, global price of bitcoin surged to an all-time high of $15,058 on the Bitcoin Price Index (BPI) at 11:00 UTC on Thursday. On the CoinMarketCap, the price showed no signs of relenting as it hit $15,962 at 4 p.m Nigeria time representing a 63.63 percent increase in the past one week.
Volumes went near an all-time-high in Nigeria as it reached N1.764 billion in the first week of December.
The CBOE announced on Tuesday that its planned bitcoin futures product will begin at 5 p.m. CT, with the first full day of trading starting that Monday. Trading of bitcoin on the CBOE will be free through the end of December, says the company.
The emergence of Bitcoin futures contracts seem a significant step toward giving legitimacy to the virtual currency that was once the preoccupation of a handful of tech start-ups and often associated with international money laundering.
Both exchange operators have already gotten the nod of the Commodity Futures Trading Commission, the primary US futures market regulator, to launch the contracts. Nasdaq, the New York-based exchange operator is expected to launch bitcoin futures in 2018.
Experts explained that futures enable investors to speculate on and hedge against the price of assets. The futures market, according to the Financial Times, is well developed for currencies, providing analysts with an important proxy for the $5 trillion a day global foreign exchange market.
“Given the unprecedented interest in bitcoin, it is vital we provide clients, the trading tools to help them express their views and hedge their exposure,” said Ed Tilly, Chief Executive Officer of CBOE. “We are committed to encouraging fairness and liquidity in the bitcoin market.”
Bitcoin trading spiked in Nigeria last week as investors bought over N1.764 billion worth of bitcoins on the various exchanges in the country. The price of bitcoin was trading at N4.315 million on the Luno Price Index, a 58.71 percent rise in the past one month. Luno provides exchange services to clients in Nigeria and other emerging markets.
Explaining the reason behind the price increase, Owenize Odia Luno country Manager, told BusinessDay said “The supply side is fixed, so that is easy. On the demand side, it is a combination of increasing institutional interest (and new instruments to help them get exposure like shorting and ETF’s); people learning a lot more about how digital currencies work and why it is an important technology; the world economy looking somewhat shy and the people looking for alternative yield and exposure; and the media generally being more objective about it.”
Tim Akinbo founder of Tanjalo.com another local Bitcoin exchange told BusinessDay that the introduction of a regulated futures market for bitcoin will potentially provide a vehicle for funds that were prevented from investing in cryptocurrencies to have some exposure to it. The development could also legitimise trade in the virtual currency.
“I also hear that the future derivatives could make it possible for investors to short bitcoin. So if there are investors out there who think the asset is overvalued, they could take short positions,” Akinbo said.
“When someone buys something with the belief that it would go up in value and they would make a profit, it is called a long position. On some markets, you can borrow an asset and sell it with the intention to buy it back at a lower price because you believe the price will go down.”
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