Wall Street is now rolling out new ways to trade bitcoin that will allow investors to bet on the cryptocurrency’s future prices, which as we have already witnessed is quite shaky at the moment. To facilitate these bitcoin futures exchange, Wall Street is using Chicago Board Options Exchange, CBOE which is a renowned exchange in the United States.
After being launched on Sunday, the bitcoin futures on Monday entered their first full day of trading in the exchange run by CBOE Global Markets. Financial analysts who have been monitoring the trends in bitcoin and its price fluctuations are very optimistic that the move to launch the bitcoin exchange would steer the highly-valued cryptocurrency towards legitimization as well as mainstream acceptance.
Thanks to bitcoin’s 1700% price bump to a whopping $17,383 from a little less than $1000 at the beginning of the year it has gained a considerable amount of attention from global financial markets as well as notorious investors. However, one thing that bitcoin has not succeeded at shaking off are the warnings and predictions that it is just a speculative bubble that is bound to burst any time soon – according to a number of critics and investment experts, the trends in bitcoin are very similar to the Dutch tulip craze in the 1600s as well as the tech stock exuberance of the late 90s.
As much as some of these claims may hold, there are a plethora of reasons why bitcoin futures are attracting so much attention especially in the world of cryptocurrency and even Wall Street.
The expected outcomes are the key propellants of the drive towards launching bitcoin futures exchanges and one rather obvious one is the hope of damping bitcoin’s insane volatility. Furthermore, it is possible that it could prompt or compel the participation of many other Wall Street firms.
On the debut date, about four hours after the official launch of the BTC contract, it experienced a 20% spike that resulted in two trading halts. In addition to this, there was an immense amount of traffic that eventually caused the CBOE website to delay and experience a few brief outages. Regardless, bitcoin regained altitude almost immediately and even reached a record high before stabilizing later. At the moment, there are a number of fund managers that after witnessing CBOE’s success are seeking permission to launch their own bitcoin exchange-traded funds. These fund managers, who had to revisit the U.S Securities and Exchange Commission regarding the issues included Van Eck Associates Corp, REX Share LLC, and First Trust Advisors LP.
Previously, investors who were interested in investing in bitcoin have had a very hard time since the only way to trade in them was to buy them from cryptocurrency exchanges such as Bitcoin. Wealthy investors, on the other hand, have had to resort to hedge to get in on the bitcoin action. Fortunately, all this is about to change immensely as there will be index funds that are capable of tracking digital currencies just like in stocks. An example of a product of this initiative is Bitwise HOLD 10 Private Index Fund which has since been announced and is the brainchild of the Bitwise Asset Management.
According to Craig Pirrong, a University of Houston finance professor, “Bringing Bitcoin into a more structured, regulated and transparent environment will make it safer and easier for people to trade, more reliable and less susceptible to manipulation.”