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Bitcoin Futures Launch – The Full Lowdown

The latest news on the December 10th launch of Bitcoin futures.

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As announced, the Chicago Board Options Exchange (CBOE) launched Bitcoin futures on December 10th, becoming the world’s first exchange to offer crypto futures contracts. Here’s a closer look at how it all happened, and what’s next for Bitcoin.

Giving it the Big Build Up

Back in November, the Chicago Mercantile Exchange (CME) – a multinational futures exchange – were actually the first company to announce their intentions with regards to futures contracts. The US Commodity Futures Trading Commission (CFCT) confirmed that it had accepted listings from CME, CBOE and Cantor Fitzgerald, with only CME announcing a potential time frame – Q4 2017. However, CBOE snuck in to steal their thunder with an unexpected announcement that their own futures would begin on December 10th – only a few days away.

In the build up to the release, we’ve seen Bitcoin rise and rise, smashing its own records on an almost daily basis. The momentum it has gathered has looked seemingly unstoppable, and represented a rise from the ashes following huge drops in November that were partly caused by the disastrous release of Bitcoin Gold, the much-maligned hard fork of BTC. To put this into context, trading closed in the US on November 12th at $5775, meaning that the value had almost tripled on December 8th when the $17,000 barrier was briefly broken.

The Big Day

As the launch grew nearer, speculation mounted that new highs were around the corner. What actually happened though, was that the CBOE website received so much user traffic that the site itself almost immediately crashed. It didn’t seem to matter too much though, with two separate upward spikes triggering temporary halts in trading – as per the regulations, significant fluctuations in price trigger a trading block. While only $400,000 of trades were processed in the opening 20 minutes and $9.1 million in the first hour (compared with $170 million of standard trades on Bitfinex), previous launch models for other products indicate that bigger and better things are around the corner.

What’s Next?

CME launch their futures contracts on 18th December, so there will be some very interested onlookers. If the price continues to stay relatively stable on an upward trend, then there is likely to be considerable interest which may well cause another swift rise. At the moment, this is looking likely, as BTC has been trading at between $15,000 and $16,500 since the launch. Looking to 2018, Cantor Fitzgerald are scheduled to launch their announced contracts in Q1, and it is thought that others will announce early in 2018 depending on the success of frontrunners CBOE and CME.

Looking further afield, Tokyo Financial Exchange is waiting on a change in the law – the Financial Instruments and Exchange Act – before launching its own futures contracts. The success or failure of this attempt in Tokyo could be key, as this would likely signal worldwide adoption of futures.

The success of futures contracts would represent a huge step into the mainstream for cryptocurrency, and could well signal many more trading options in 2018. At the same time though, the closer BTC gets to the stomping ground of the big banks, the closer it comes to attracting regulation from the governments of the biggest players – the US, Japan and South Korea. For the moment though, Bitcoin futures have successfully launched and are in their infancy. The next few weeks will be extremely interesting.

Image via Yuji Nakamura

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