Bitcoin Markets Really Like CBOE Futures, Prices Spike Sharply

Despite speculation that Bitcoin futures would make the famously volatile asset easier to short, the launch of CBOE futures trading this evening sparked a huge rally for the currency. Futures trading began at 5 PM Central time on December 10 at a price of $15,000, matching the price of one Bitcoin on the Gemini exchange.

As of press time, roughly five hours later, the price of Bitcoin has risen to $16,800 on Gemini. Futures expiring in January 2018 are trading at $18,500, a $3,500 rise. This rapid rise in the futures price has already triggered two “circuit breakers” and is threatening to trigger a third. CBOE has implemented so-called circuit breakers to give traders a chance to pause and reconsider in the event of large price movements. Any gain or loss of more than 10% triggers a two minute stop to trading, while a move of 20% or more will cause trading to pause for five minutes.

As we reported earlier tonight, CBOE’s launch of its Bitcoin futures product (which trades under the “XBT” ticker) caused such a sharp increase in demand that the exchange’s website went down almost immediately. In the last five hours, about 2,000 contracts have traded hands. Each contract represents one Bitcoin, implying a trading volume of greater than $30 mln in just a few hours. This is especially noteworthy considering Wall Street traders generally only work Monday through Friday. Odds are good that tomorrow will be a very big day, indeed.

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