The Final Frontier
Cboe Global Markets, the Chicago-based exchange group, will be the first exchange to launch bitcoin futures on Sunday. And you can be sure Wall Street will be watching. And Nasdaq is preparing for a launch for the second-half of Many people think bitcoin futures, if they go well, will open the door to wider participation in the bitcoin markets by Wall Street firms and retail investors.
Cboe President Chris Concannon has already hinted other cryptocurrency futures might be on the horizon. We've answered some of the questions you might be asking yourself about bitcoin futures. They've been around since the late 19th century. In some cases, when a futures contract settles the buyer of the contract can receive gains in the product itself a barrel of oil, say , or in cash.
The latter are referred to as cash settled futures. Cboe's bitcoin futures, which are set to launch at p. CT, will allow investors to bet on the future price of the red-hot coin. The product will trade under the ticker XBT. Cboe will be waiving all transaction fees for bitcoin futures until the end of December. The futures will settle in cash, not the underlying cryptocurrency itself.
That means traders can speculate on the coin without actually having to touch it. Cboe is basing its futures on the pricing of Gemini's exchange , which was founded by the famous Winklevoss twins.
Traders will have to put some money on the table for their bets. Think of them as a down-payment for risk. If a trader bets the price will go up and if the price of bitcoin is higher at the point of the contract's expiration, then they profit. At the same time, if a trader bets the price will go down and it does, then they'll get paid from folks on the other side of the bet. Cboe's expiration date for the contracts being sold Sunday is January Retail investors can buy futures contracts through their broker.
But only a few firms are seriously thinking about unleashing bitcoin futures just yet. TD Ameritrade, one of the largest online brokers, is taking a "wait and see" approach and won't provide the product for clients until they think the market is ready.
It looks like folks with Charles Schwab, Fidelity, and Etrade accounts won't be able to buy the product, at least in the short term. Ally Financial, according to Bloomberg, will let users buy bitcoin futures. As far as the big banks are concerned, many have said they won't clear trades for bitcoin futures. JPMorgan and Citigroup, which are two of the largest futures brokers, will not participate in the market Sunday.
Nor will Societe Generale. Interactive Brokers and Wedbush will participate, according to reporting by the Financial Times. Day one trading is going to be comprised mostly of the customers who have been begging for bitcoin futures, according to person familiar with Cboe's bitcoin futures. These are likely to be the investors who've been trading bitcoin itself.
There are a number of reasons why bitcoin futures products are a big deal for Wall Street and the world of crypto. First, the launch of bitcoin futures by establishment firms is likely to open the door to wider participation in bitcoin trading by other Wall Street firms.
It could also pave the wave for an exchange-traded fund, which could bring more investments into the space. Most importantly, it could help dampen bitcoin's spine-tingling volatility. Some people don't think the underlying bitcoin market is mature enough for a futures market. The market is unstable with bitcoin exchanges under pressure and printing wildly different prices when trading volumes spike.
Hacks and security problems are also widespread. Critics think that instability in bitcoin could spread to other corners of the futures markets.
Search icon A magnifying glass. It indicates, "Click to perform a search". Close icon Two crossed lines that form an 'X'. It indicates a way to close an interaction, or dismiss a notification. Frank Chaparro. The product will allow investors to bet on the coin's future price and could open the door to wider-participation in the market by retail investors and institutions. We've answered all of your possible questions about bitcoin futures and what they mean for Wall Street.
What are futures?
Futures are an agreement to buy or sell an mesn on a specific future date at a specific price. Once the futures contract has been entered, both parties have to buy and sell at the agreed-upon price, irrespective of what the actual market price is at the contract bitconi date. The goal is not necessarily profit maximization. Futures are also used in portfolios to balance out price fluctuations on investments, where the underlying asset is particularly volatile. These contracts are negotiated and traded on a futures exchange which acts as the intermediary.
This Internet Thing will Never Work Out
OKEX released this statement on August 3rd explaining that a very large trade occurred, that it had losses that surpassed the exchanges' obligation to support, so they are enacting "the societal loss risk management mechanism. If anything, the problem seems to start with incredibly lax risk management at this exchange. The biggest lesson here is to do you diligence when making your Bitcoin or other crypto bets. Futures prices have not recovered yet, which is interesting, given that away from this story, there were several positive events for the industry that are generating a lot of buzz, but so far aren't helping price. The bottom line is that this should not derail bitcoin futures, it might even help the best regulated ones gain market share, but it will attract more regulatory scrutiny.
OKEX released this statement on August 3rd explaining that a very large trade occurred, that it had losses that surpassed the exchanges' obligation to support, so they are enacting "the societal loss risk management mechanism.
If anything, the problem seems to start with incredibly lax risk management at this exchange. The biggest lesson here is to do you diligence when making your Bitcoin or other crypto bets. Futures prices have not recovered yet, which is interesting, given that away from this story, there were several positive events for the industry that are generating a lot of buzz, but so far aren't helping price.
The bottom line is that this should not derail bitcoin futures, it might even help the best regulated ones gain market share, but it will attract more regulatory scrutiny. Not every article I have read makes this clear. So the bright side of this story is that the contracts listed and traded on U.
That is encouraging from both a regulatory aspect and for the future potential what does future mean for bitcoin of cryptocurrency linked products in the U. According to the OKEX statement, the risk management team 'immediately' contacted the client to reduce the size of the trade - begging the question - how did their risk management system allow the trade to occur in the first place?
On the bright side, something like that should be easy to fix, but it is indicative, potentially of how many simple things are being overlooked in the rush to make money from crypto trading. I am sure that regulators will be questioning them on the back of the OKEX, as they should, and I am also quite positive the exchanges here will pass with flying colors. The volatility surrounding crypto makes it hard enough to trade, let alone having to take into tail risk, like societal loss.
If anything, this should drive business to the best regulated and largest exchanges. This particular trade, and unwind seems to have affected bitcoin pricing globally and likely impacted trading of the U. Volumes and open interest seemed to have increased around the time of this large trade unwind. It could be a coincidence, though I suspect that some smart traders, aware of the situation, put short trades on in these future contracts to take advantage of the forced unwind.
I will delve into those positive developments tomorrow. I focus on global macro and current market drivers, with an emphasis on the fixed what does future mean for bitcoin markets. I have 20 years of experience as a trader, structurer, and strategist Share to facebook Share to twitter Share to linkedin. Peter Tchir. Read More.
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Hello and welcome to this article all about the future of Bitcoin. In theory, almost anything that can be done with a computer could, in some way, be rebuilt on a cryptocurrency-based platform. Search icon A magnifying glass. Leave a comment Hide comments. This makes it possible to use Bitcoin to buy just about anything imaginable! Daniel Jeffries February The NEM architecture is a good first step, as it includes firewall like protection for nodes. In fact, most people get the future laughably wrong so before we leap into our predictions, we need to understand why so we can try to avoid the same mistakes. As people hear stories of others making money from cryptocurrencies, they buy their own — which inflates the price, creating more stories of wealth and more investment. We expect to see Russia join the list of advocates in the near future, following comments from the Russian Deputy Finance Minister that regulators will be looking to recognize Bitcoin and other cryptocurrencies legally next year, the government eager to tackle money laundering, which certainly incentives greater oversight and regulation, ultimately leading to its legitimacy. In the second case, futures contracts are used as a hedge against adverse price movements that would affect link entity that actively uses or produces the underlying asset in the contract. Blockchain writer, web developer, and content creator. All current economic theory will prove about as advanced as cave paintings as we experiment with new economic systems over the coming years. You should always make a decision based on your own research, so please consider .