Chaos as Bitcoin has debut on Wall Street
Bitcoin futures surged as much as 26pc in their debut session on Cboe Global Markets's exchange, triggering two temporary trading halts designed to calm the market. Initial volume exceeded dealers' expectations, while traffic on Cboe's website was so heavy that it caused delays and temporary outages. The website's problems had no impact on trading systems, Cboe said. Bitcoin's spot price rose.
Trading over the exchange marked the world's most popular cryptocurrency's Wall Street debut. Some analysts had anticipated that the development would pop what many regard as a Bitcoin bubble.
"It is rare that you see something more volatile than Bitcoin, but we found it: Bitcoin futures," said Zennon Kapron, managing director of Shanghai-based consulting firm Kapronasia.
The launch of future contracts on a regulated exchange is a watershed for Bitcoin, whose surge this year has captivated everyone from mom-and-pop speculators to Wall Street trading firms. The Cboe contracts, soon to be followed by similar offerings from CME Group and Nasdaq, should make it easier for mainstream investors to bet on the cryptocurrency's rise or fall.
Bitcoin wagers have until now been mostly limited to venues with little or no oversight, deterring institutional money managers and exposing some users to the risk of hacks and market breakdowns.
Bitcoin futures expiring in January were 20pc higher at $18,040 early yesterday morning in New York from an opening level of $15,000, on 3,051 contracts traded.
"It was smooth, and Bitcoin traders don't seem to be put off by futures," said Craig Erlam, senior market analyst in London at online trading firm Oanda. "There was a fear that short selling would have an adverse impact on price, but we haven't seen that yet."
The spot price climbed 4.9pc to $16,402 from the Friday 5pm close in New York, according to the composite price on Bloomberg. The roughly $1,600 difference reflects not only the novelty of the asset but also the difficulty of using the cash-settled futures to trade against the spot, strategists said.
"In a normal, functioning market, good old arbitrage would settle this," Ole Hansen, head of commodity strategy at Saxo Bank said by email.
Proponents of regulated Bitcoin derivatives say the contracts will increase market transparency and boost liquidity, but skeptics abound. JPMorgan Chase CEO Jamie Dimon has called Bitcoin a "fraud". The Futures Industry Association, representing major banks and brokers warned Bitcoin futures contracts were rushed without enough consideration of the risks. (Bloomberg)