Bitcoin Enters Wall Street, Futures Surge
Bitcoin officially penetrated Wall Street on Sunday evening after the first bitcoin futures began trading on the CBOE Global Markets exchange. This led to two triggered trading halts as prices spiked.
Since trading began, the CBOE price has been notably higher than the ‘spot’ price of bitcoin. This is likely due to the fact that the dollar payout for January 1st contracts would not be settled until the 17th, which is an eternity in the volatile cryptocurrency world. This means that the conversion for payout would be done with the price of bitcoin on the 17th, not the 1st. Thus, a premium is added to the futures price as many investors will likely look to receive payment in fiat currencies over the actual bitcoins.
While the immediate effect on bitcoin’s price has been positive, it is widely believed that the introduction of future contracts will be the first real test for bitcoin’s valuation as investors now have a proper vehicle to stake bearish positions.
Rival exchange CME Group, Inc. reportedly plans to introduce bitcoin contracts next week. This will undoubtedly have a major impact on the volume of futures traded, but we will have to wait until the dust settles to understand the full impact on the volatile cryptocurrency.