Bitcoin successfully weathered its first day on Wall Street, defying the apocalyptic predictions of bitcoin skeptics, many of whom have been quite vocal in their criticism of bitcoin’s rise and the launch of bitcoin futures contracts.
Though described by some professional traders as “one of the greatest shorting opportunities ever,” CBOE’s bitcoin futures actually rose in price during their first 24 hours of trading. Consequently, it appears that bears are unwilling to put their wallets where their mouths are — at least for now.
At the time of writing, January futures were priced at $17,900, indicating that traders believe bitcoin’s rise will continue — albeit at a much slower pace — into the new year. Bitcoin’s spot price is currently $16,819, according to the BlockExplorer Bitcoin Price Index.
Volume was thin compared to other assets — and it was little more than a drop in the bucket compared to the $13 billion traded on bitcoin exchanges during the same period — but it nevertheless exceeded $50 million, which is more than what many analysts expected to see, especially considering that many major banks have not yet provided clients with access to bitcoin futures products. However, that may change, especially once fellow U.S. derivatives exchange CME begins trading bitcoin futures on December 18.
Though similarly structured, CME’s contracts will have some notable differences from of those of CBOE.
While CBOE contracts represent one bitcoin each, CME’s will constitute five. Consequently, CME’s contracts will likely keep many retail investors out of the marketplace because of present exchange rates — even with leverage.
Additionally, CME’s bitcoin price will be based on a proprietary spot price that includes data from multiple exchanges. CBOE’s is based solely on Gemini’s daily auction price. This could lead to price gaps between the two exchanges.
Finally, CME is much larger than CBOE and will likely attract more volume from institutional investors, meaning that the CME launch will provide a fuller picture of where Wall Street believes bitcoin is headed in the short-term future.
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