By KryptoMoney December 11, 2017
The First Ever Bitcoin Futures Launch In CBOE Platform Amidst Much Volatility
The very first Bitcoin futures which created quite a stir in crypto market for sometime had finally been launched by Chicago Board Options Exchange (CBOE) on Sunday, December 10. But within hours of its launch it had to undergo an extreme volatile patch which as we all know is an inherent character of these digital tokens.
The Bitcoin futures climbed up the price ladder by 10% within just two hours after its ET launch at 6 p.m. thereby triggering a trading halt for twominutes. The futures had increased in price by 20% within 10:05 p.m. causing another trading halt for five long minutes. All exchange rules were followed by proceeding with these halts in line with halting of stock trading following sharp price moves. The launch of bitcoin futures is being viewed by various cryptocurrency proponents as a big step towards legitimizing digital currencies in front of the institutional investors. Tom Lehrkinder, a senior analyst working at the consulting firm Tabb Group pointed out that these halts are “not surprising based on the volatility of the underlying [asset]. The futures are behaving as expected and designed.”
These bitcoin futures were launched by CBOE under the ticker symbol of “XBT” on Sunday. However the futures launch was closely followed by a price rally of Bitcoin which skyrocketed above $16400 . The first futures contract having an expiry date in 17th January 2018 traded at $18490 on 11:19 p.m., ET and turned negative for a brief period at 6:55 p.m. before bouncing back to its track of glory. Posts in social media pointed at contract purchases which are scheduled to expire in 14th March of the coming fiscal. The price of Bitcoin had increased by leaps and bounds after announcement of such futures trading were made months back. Thus it is very obvious that the final level interest of investors in the same would also be immense.
At the time of publishing this article, Bitcoin price was $16,681 with a market cap of$279,131,930,525.
The new product garnered so much interest that CBOE’s website became overloaded with the surge of traffic. The exchange said in a statement that,
“Due to heavy traffic on our website, visitors to http://www.cboe.com may find that it is performing slower than usual and may at times be temporarily unavailable. All trading systems are operating normally.”
Till now Bitcoin was traded mostly by a handful of entrepreneurs. However in the coming days, institutional investors can also buy into the crypto space. In spite of gaining magnanimous interest, analysts feel that the response could still have been better. They pointed out that within two-and-a-half hours following the launch, only 800 contracts were traded. Bobby Cho, the head trader at Cumberland, a leading cryptocurrency bitcoin trading company was quoted as saying that,
“There aren’t that many market participants. People are just going about trading very thoughtfully, very mindfully.”
The number of contracts crossed the 1500 figure within just four hours of the futures launch. Tabb’s Lehrkinder said that, “it works. There’s buyers and sellers.”
He however agreed to the fact that crypto trading cannot be accessed by some funds and it will take time before such funds can utilize futures to bet against or short bitcoin gains. Andrew Keene, the CEO of AlphaShark Trading, felt that the bid-to-ask price spread was “too wide” for him to engage in impromptu futures trading. He exclaimed that, “I can’t trade a product when the spread is $120. If those spreads tighten up, then it will be much easier” for people to trade.
CBOE is taking aid from the Gemini Trust Company for basing the price of its bitcoin futures wherein each futures contract shall be equivalent in value to one Bitcoin. Once CME launches its futures contract which is known to be worth Five bitcoins, institutional investors shall receive further support as this can pave the path for bitcoin legitimization. Tom Lee, the founder and head of research at Fundstrat Global Advisors feels that,
“The introduction of derivatives provides the necessary market structure for institutions to allocate to crypto-currencies,” which are short-term and long-term positives. He also added that derivatives are “the first step to enable the creation of ETFs and other more liquid instruments.”
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FAQs
At the end of 2017, the Bitcoin price dropped significantly by approximately 70% over the two months. Since the introduction of Bitcoin futures coincided with this market crash, it is said that the new financial instrument might have caused the market crash.
Do Bitcoin CME gaps always get filled? ›
The significance of the CME gap for Bitcoin traders
Historically, the gap has always been filled once the market opens. Therefore, it's an opportunity for traders to trade in its direction. Then, there's the psychological impact and sentiment around predicting the market.
What is the Bitcoin gap in the Chicago Mercantile Exchange? ›
A CME gap refers to the difference between the closing price of Bitcoin on the Chicago Mercantile Exchange (CME) and its opening price when trading resumes. It occurs during weekends or after the market closes for a specific period.
How to find CME gaps? ›
On Bitcoin charts, CME gaps are found by comparing the price levels at which the Friday close and Monday open differ. These gaps are frequently noticed by traders because they might later serve as support or resistance levels.
When did Bitcoin start crashing? ›
What caused bitcoin's big crash in 2022? In March 2022, the price of one bitcoin was around $46,000. But the market turbulence that followed saw this drop by nearly two thirds. In June 2022 bitcoin dropped below $20,000 for the first time since 2020.
What happens when Bitcoin futures expire? ›
Each option will expire into its underlying futures contract, and that futures contract instantaneously settles into cash.
How many bitcoins are in a futures contract? ›
What does CME futures mean for Bitcoin? ›
Bitcoin futures contracts trade on the Chicago Mercantile Exchange (CME), which introduces new monthly contracts for cash settlement. The CME offers monthly BTC futures contracts for six months and additional quarterly contracts for each of the four upcoming quarters.
Do all stock market gaps get filled? ›
Gaps in stocks occur when a stock's price jumps suddenly between two candlesticks, leaving behind a vertical gap in a chart. These gaps typically occur in response to after-hours news, but they can also result from a spurt of increased trading in the middle of a larger trend. Gaps often fill, but they don't have to.
Which address holds the most Bitcoin? ›
Bitcoin Billionaires
The three addresses with the most bitcoin belong to Binance, Bitfinex, and another address, whose identity is unknown. These four addresses collectively own more than 577,502 bitcoin. The exchange addresses represent the holdings of many individual investors who are not holding their own keys.
Changpeng Zhao (CZ)
Changpeng Zhao, better known as CZ, is the founder and CEO of Binance, the world's largest cryptocurrency exchange by trading volume.
Does Chicago use Bitcoin? ›
A: Yes, Chicago boasts a wide network of Bitcoin ATMs provided by Crypto Dispensers, CoinFlip, and RockItCoin, allowing for quick and easy Bitcoin purchases with cash.
Do CME gaps always fill? ›
While CME gaps have been observed to fill in the past, it is important to approach them with caution. They should not be solely relied upon as a trading strategy, as market dynamics and other factors can influence price movements, leading to different outcomes.
How do I claim CME points? ›
To complete a CME cycle complete these steps:
- Select the credits you would like to redeem. You can select by month range or by credit count.
- Select the appropriate option for each search and indicate how you applied the information to your practice. ...
- Complete the evaluation.
- Click Submit.
How to earn and redeem CME credits in UpToDate
- Log in or register to create a username and password.
- Search for a clinical question in UpToDate.
- UpToDate will automatically track the questions in the CME or CE tab.
- Select the tab to view all your redeemable credits organized by month.
17 December 2017: Bitcoin's price briefly reaches a new all-time high of $19,783.06. 22 December 2017: Bitcoin falls below $11,000, a fall of 45% from its peak. 12 January 2018: Amidst rumors that South Korea could be preparing to ban trading in cryptocurrency, the price of Bitcoin depreciates by 12 percent.
What happened to Bitcoin Cash in 2017? ›
Bitcoin Cash forked from Bitcoin in 2017. This split was motivated by philosophical and technical disagreements about the most effective way to increase the currency's transaction limits.
What effect did the introduction of Bitcoin futures have on the Bitcoin spot market? ›
The launch of Bitcoin futures ended up making the bitcoin spot market not only more volatile but also more vulnerable to extreme return values.
What was Bitcoin at 2017? ›
The year 2017 started off slowly enough, with Bitcoin wavering between $1,000 and $1,200. But by late April, the digital currency was clearly moving higher. The end of May saw Bitcoin at $2,300, but despite a move higher, it was back below $2,000 by mid-July.
