Excitement Stirs As First Bitcoin Futures Go Live In Chicago
The biggest buzzword in the cryptocurrency space right now is "Bitcoin futures."
In general, futures are financial instruments that let investors "bet" on the performance of assets in traditional stock market environments.
The big development, then, is that the very first Bitcoin futures contracts just went live on Chicago CBOE futures exchange. This is a milestone for all cryptocurrencies, to be sure, and it pushes Bitcoin that much closer to being a mainstream asset class.
So how did the first day of BTC futures trading go? We've got the scoop.
Bitcoin excitement causes CBOE website crash
As Bitcoin futures first began to be traded on Sunday evening, it didn't take long for the exchange to get a taste of the hyper-interest that's at play in the crypto space.
That's because within minutes of the launch, the CBOE website crashed for many due to an overload of traffic.
Trading wasn't disrupted by the outage, and support staff were able to get the site back up and running quickly. But the episode is reminiscent of Coinbase's recent outage woes from hyper-growth. The CBOE Group, Inc. can expect more where that came from in the days ahead.
Contracts specs at present
The way futures are set up are over certain periods of time. So the current Bitcoin futures contracts being offered on the CBOE futures exchange expire in January 2018.
These contracts opened at $15,000 USD level. In the ensuing hours, they slid up over 25 percent to upwards of $17,500.
And while these contracts still have a long way to go before becoming heavyweights, many pundits were still surprised over how popular they were after launching on Sunday. Nearly 3,000 BTC futures contracts were transacted after trading began.
And it's also worth noting that the CBOE exchange instituted trading halts when price volatility was too extreme. Indeed, trading was paused twice: first after a 10 percent price gain and then after a 20 percent price gain.
Overall? Went as well as it could've
Many users in the space were nervous in the build up to Bitcoin futures. Some wondered if these futures might actually work to suppress, not foster, the bitcoin price.
The good news for now, then, is that everything's gone pretty much according to plan. Bitcoin and the stock markets are doing just fine. The sky hasn't fallen yet and these futures seem pretty promising going forward.
Veterans of futures trading agreed. Per Craig Erlam, a market analyst at London's Oanda firm:
"It was smooth, and bitcoin traders don’t seem to be put off by futures. There was a fear that short selling would have an adverse impact on price, but we haven’t seen that yet.”
Erlam's colleague at Oanda, Stephen Innes, said that there's room for improvement yet:
“We’re in the early stages here, and there’s not enough professional liquidity from the big market makers who can provide depth and hold in the movements. It’s going to be a learning curve.”
Now, the interesting thing to keep an eye on is how the situation develops as exchanges like the Nasdaq and CME Group, Inc. continue to launch their own Bitcoin futures products in the coming weeks.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.