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Bitcoin – Futures Goes Live

By:
Bob Mason
Updated: Dec 11, 2017, 09:47 UTC

Bitcoin futures goes live and the first day of trading favors more gains for Bitcoin, with volumes higher than had been anticipated. Bitcoin's weekend dip looks to be fueling another record run, though volatility will likely pick up.

Bitcoin

Bitcoin – Futures Goes Live

Bitcoin futures went live on Sunday and it certainly didn’t go unnoticed, with the opening of two futures exchanges this week having garnered a significant amount of news coverage in recent weeks.

The Cboe futures market was the first to launch, with the CME Group scheduled to launch its Bitcoin futures contracts on 18th December.

We’ve heard plenty of speculation on the possible effects of the availability of Bitcoin futures on Bitcoin itself and the cryptocurrency world in general. The ability to short as well as go long on Bitcoin futures prices prior to contract expiration expected to lead to increased volatility in Bitcoin.

The vast amount of trades to-date have been long positions, with those looking to take short positions challenged by the inherent difficulties that have persisted in going against the grain. In hindsight, the difficulties will have been a blessing in disguise, but that doesn’t mean that the Bitcoin bears will shy away for ever.

Futures markets not only offers the option to go short, but also provides a leverage platform and this may draw in investors looking to boost earnings, though caution will is needed with Bitcoin’s volatility having shown its teeth in recent days.

Bitcoin futures this morning surged to just shy of $18,000 before easing back with more than 2,000 contracts reportedly changing hands, which is a relatively small number of contracts when compared to other asset classes, but still higher than had been anticipated.

The jump in January’s futures price provided strong support for Bitcoin in the early part of the day today, with Bitcoin gaining 12.01% to $16454.87 at the time of writing in what looks to be another move towards record levels from a weekend that saw Bitcoin fall to sub-$13,000 levels.

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Bitcoin had taken a hit over the weekend, following news of more than 230,000 transactions pending on the Bitcoin exchanges. The reality remains however that few are unaware of the transactional speed issues and the logjams that hits the Bitcoin world on a relatively frequent basis.

Hopes are that forks through the next 6-12 months can make the necessary improvements to Bitcoin’s blockchain technology without any further offspring and, as the Bitcoin Futures markets are pointing out, current bets are for further gains through to January.

It will certainly be an interesting week ahead. How much influence Bitcoin futures contract prices will have on Bitcoin’s price is an unknown, but we will expect there to be some influence as investors begin to take notice of what the more professional investor thinks on Bitcoin and its likely directions.

With the amount of leverage taken on by Bitcoin investors on the rise, a futures market induced collapse would certainly be damaging to the evolution of the markets over the near-term, though the gains made by early investors, who continue to hold on to their Bitcoins, and liquidity in the exchanges are expected to be soften the effects of any material decline in value.

It’s looking rosy for now though and the CME futures could provide a further boost should we see similarly bullish sentiment towards Bitcoin’s value.

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About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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