First Bitcoin Futures Contract Gets Settle, ‘Bears’ Win the Bet
The cryptocurrency market had a turbulent start to the week with a lot of cryptocurrencies seen correcting heavily as the overall market valuations slide below $550 billion in valuations. Moreover, the first Bitcoin Futures Contract by the Chicago Board Option Exchange ended on Jan 17, 2018, at $10,900 which clearly states that the Bitcoin ‘bears’ have won the bet over the ‘bulls’.
This shows that many of the analysts who rightly predicted a month back, that Bitcoin is poised for a correction after its dramatic run in the November and December 2017 last year, are taking some truckloads of handsome profits with them.
On the other hand, the massive sell-offs in the cryptocurrency markets in the past few days has pinched hard many of the retails investors or new entrants who were trying to ride further on the bullish momentum, last month.
The CBOE Bitcoin futures contracts are completely cash-settled meaning that it allows speculators and investors to put a bet on whether the price of Bitcoin will rise or fall, without actually holding the cryptocurrency.
The CBOE futures are priced on the auction price of Bitcoin in U.S Dollars provided by the Gemini Exchange that is operated with the much famous Winklevoss brothers who recently gained a huge reputation for making a billion-dollar fortune from their Bitcoin investments.
On the first day of launch go CBOE futures, the auction price for the contract was placed at $17,285.89, with the final price ending at $10,900 on Jan 17, 2018. This shows a staggering drop of 36% over a months’ time. As per the data provided by the Commodities Futures Trading Commission (CFTC), more 1900 contracts have been placed for the short position in the second week of Jan. 2018.
With the closure of the first futures contracts, there are also talks about arrival of ‘Bitcoin Options’. However, for that to be achieved, the market needs to witness several months of smooth closure in the futures contracts along with a large open interest in the contracts. However, so far, there has been weak volumes and low open interest causing many to believe that ‘Options’ are out of question.
As reported by Bloomberg, CBOE President, Chris Concannon, is optimistic to carry further crypto-futures revolution to other altcoins as well. Chris said: “You look at the entire crypto space and you look at what other products have, the liquidity and the notional size, a derivative makes sense.”
The Gemini Exchange indirectly lauded this move in its blog post by quoting Chairman Ed Tilly stating “This is an encouraging initial milestone, and we look forward to working with customers to power the growth of this nascent market.”