Bitcoin has become the talk of the investment world in recent weeks, with its skyrocketing price making the cryptocurrency a force to be reckoned with. Signifying the progress of Bitcoin, its arrival as a futures trading option was something that had many traders and investors on tenterhooks. The critics came out in force prior to its launch, with speculation amongst many being that it would rock the famously volatile asset. How wrong the skeptics would be, as the launch of Bitcoin CBOE futures trading – under the “XBT” ticker – got off to a flying start.
Not just giving Bitcoin a boost, but sparking a huge rally, Bitcoin futures trading began at 5pm CMT on December 10th with the currency valued at $15,000, but five hours down the line it reached $16,800. Futures that carry a January 2018 expiry currently trade at $18,500, representing a very respectable $3,500 rise. The sheer power of the Bitcoin price rise has triggered two “circuit breakers”, with a third now on the horizon.
CBOE opted to implement circuit breakers as a means to give traders a chance to stop and reconsider any future moves when large price shifts occur. Represented by either a two-minute or five-minute “pause” window – which occurs through a price change of more than 10% and 20% respectively – these “circuit breakers” allow traders to exhibit more control in times of extreme volatility.
Bitcoin volume hit $3 million in just a few hours
Bitcoin’s launch as a futures option was always going to impact its price, but few expected the flurry of activity that would occur. Within the first 5 hours of the launch more than 2,000 contracts exchanged hands, with each contract constituting a single Bitcoin. These figures alone mean that trading volume hit $3 million in just a few hours. When you consider that Wall Street traders tend to work a standard Monday to Friday, there could be more big news and potential bitcoin price growth as the week unfolds.
Even if some believe that Bitcoin still isn’t strong enough to sustain a futures market, there are a number of reasons as to why this launch will have a defining impact on Bitcoin’s performance moving forward. First, bitcoin futures will open the door to Wall Street, a mainstream investment hub that should ensure a wider participation in Bitcoin trading.
It’s also believed that this will lead the way to an eventual exchange-traded fund, with this only set to further the level of investment in the Bitcoin space. Finally, should Bitcoin futures become a mainstay within various leading establishment firms – with CME trading bitcoin futures from December 18th – then it could calm the cryptocurrency’s rocky volatility.
