Two Days of Cboe's Bitcoin Futures Show Intense Volume Fluctuations

This weekend on December 10, the Chicago Board Options Exchange (Cboe) began its first trading sessions. Since then the introduction of bitcoin-based derivatives held on a well-known mainstream exchange, the news has injected a surge of positivity into bitcoin’s spot markets. Moreover, the price of Cboe’s futures products has been trading wildly starting off at the $15K mark and has reached an all-time high of $18,650.

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Over the Past Two Days, Cboe’s XBT Markets and Bitcoin’s Spot Prices See Wild Fluctuations

Cboe’s bitcoin-based futures one-month bitcoin contract (XBT:1) started trading this past Sunday, and is currently up over 8 percent higher than bitcoin’s spot price. BTC spot markets have been on a tear leading up to the mainstream derivatives products with a global average hovering between the $16,900-17,200 region. Cboe’s futures products are a different animal and contracts are cash-settled based on the BTC price data provided Gemini in U.S. dollars. These exchange-traded derivatives products are bets on the future price of bitcoin and investors wager on whether the value will be high or low. If the price of bitcoin rises or dips, the contract holder is paid out based on how much the value has climbed or dropped within a specified time-frame.

The futures markets initiated by the Chicago-based exchange initially surged over 15 percent when it first opened. At the start of the trading session, the company’s website suffered from heavy traffic and was unavailable for many spectators. However, Cboe revealed the actual futures market was unaffected by the website outage. In addition to this, trading was halted according to a Cboe spokeswoman. The platform’s futures trading can be stopped if bitcoin’s price experiences large volatile swings.

Cboe futures can only be purchased from a certified brokerage service and not all financial management brokers offer bitcoin-based derivatives products. Although, there are not that many services providing this product at the moment. One bitcoin futures retailer suggested by Cboe’s website is Interactive Brokers LLC. The site shows its fixed pricing for bitcoin futures which includes broker commission, exchange, and clearing fees. If the person registering has never used the platform they have to wait 24-hours to be approved to trade Cboe’s XBT products. There are also other brokerage services that offer retail investors and institutional trader exposure to Cboe’s XBT derivatives like Ally Invest, and Goldman Sachs.

The first day saw a lot of trading as Cboe saw 3,956 contracts on December 10 but dropped to 237 contracts the next morning. Volume has increased on December 12 with over 500 contracts, and more are being added as the day progresses. Many speculators believe the recent cryptocurrency warning tied to the Initial Coin Offering market from the SEC agency ‘shook’ Cboe futures investors on Monday. Moreover, global markets are on the rise in general with Europe and Wall Street stock showing bullish gains. Futures tethered to the Dow Jones Industrial Average, S&P 500, Europe 600 benchmark, and barrels of oil all have seen significant spikes so traders may have temporarily moved to other markets.

Speculative Mania

Bitcoin proponents are looking forward to next weekend’s bitcoin-based futures products introduced by CME Group which will bring cryptocurrency derivative to a much broader audience. The well-known hedge fund manager and former Fortress executive, Michael Novogratz, believes the rallies happening within both spot and futures markets will continue to spark the interest of both retail and much larger investors. “The market trades like it wants to go up, not down,” Novogratz explained in an interview yesterday. “We are in a speculative mania, and my sense is we are still fairly early.”

What do you think about the bitcoin futures mania that’s taking place? Do you think mainstream investors are attracted to bitcoin-based derivatives products? Let us know what you think in the comments below.

Images via Shutterstock, Cboe Global Markets, and Cboe’s advanced charts page.

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