Bitcoin Futures Rise as Trading Starts 12/11 06:10
CHICAGO (AP) -- The first-ever bitcoin future jumped after it began trading
Sunday as the increasingly popular virtual currency made its debut on a major
The futures contract that expires in January surged more than $3,000 to
$18,580 eight hours after trading launched on the Chicago Board Options
Exchange. The contract opened at $15,000, according to data from the CBOE.
The CBOE futures don't involve actual bitcoin. They're securities that will
track the price of bitcoin on Gemini, one of the larger bitcoin exchanges.
The start of trading at 5 p.m. CST overwhelmed the CBOE website. "Due to
heavy traffic on our website, visitors to www.cboe.com may find that it is
performing slower than usual and may at times be temporarily unavailable," the
exchange said in a statement. But it said the trading in the futures had not
Another large futures exchange, the Chicago Mercantile Exchange, will start
trading its own futures on Dec. 18 but will use a composite of several bitcoin
prices across a handful of exchanges.
The price of a bitcoin has soared since beginning the year below $1,000,
hitting a peak of more than $16,858 Dec. 7 on the bitcoin exchange Coindesk. As
of 1:15 a.m. CST, it was at $16,733.49 on Coindesk.
Futures are a type of contract in which a buyer and a seller agree on a
price for a particular item to be delivered on a certain date in the future,
hence the name. Futures are available for nearly every type of security but are
most famously used in commodities such as wheat, soy, gold, oil, cocoa and, as
dramatized in the Eddie Murphy and Dan Aykroyd movie "Trading Places,"
concentrated frozen orange juice.
The futures signal greater mainstream acceptance of bitcoin but also open up
bitcoin to additional market forces. The futures will allow investors to bet
that bitcoin's price will go down --- a practice known as shorting --- which
currently is very difficult to do.
There have been other attempts to bring bitcoin investing into the
mainstream. Tyler and Cameron Winklevoss, twin brothers who own large amounts
of bitcoin, tried to create an exchange-traded fund based on bitcoin, but
federal regulators denied their application.
How much actual investor interest there will be in these bitcoin futures is
still up in the air. Many larger Wall Street brokerages and clearinghouses,
including Goldman Sachs and JPMorgan Chase, are either not allowing customers
to trade bitcoin futures or only allowing select clients to do so. Other
brokerages are putting restrictions on the amount of margin a trader can use in
bitcoin futures, or putting limits on the amount that can be purchased.
The digital currency has had more than its fair share of critics on Wall
Street. JPMorgan Chase CEO Jamie Dimon has called bitcoin "a fraud." Thomas
Peterffy, chairman of the broker-dealer Interactive Brokers Group, expressed
deep concerns about the trading of bitcoin futures last month, saying "there is
no fundamental basis for valuation of Bitcoin and other cryptocurrencies, and
they may assume any price from one day to the next."
Peterffy noted that if bitcoin futures were trading at that time, under the
CBOE's rules those futures likely would experience repeated trading halts
because 10 percent or 20 percent moves in bitcoin prices have not been unusual
in recent months.
Bitcoin is the world's most popular virtual currency. Such currencies are
not tied to a bank or government and allow users to spend money anonymously.
They are basically lines of computer code that are digitally signed each time
they are traded.
A debate is raging on the merits of such currencies. Some say they serve
merely to facilitate money laundering and illicit, anonymous payments. Others
say they can be helpful methods of payment, such as in crisis situations where
national currencies have collapsed.