Bitcoin futures surge past $17000 on launch day

Lucy Hill
December 14, 2017

Dealers reported that there is more interest than expected, with a torrent of traffic hitting CBOE's website. The exchange halted trading twice on the first day to stem volatility. It increased 8 percent in less than 10 minutes after trading began.

The Cboe said at least 20 trading firms "actively participated" in the first day of trading, without giving specifics. They allow investors to make bets on the future direction of bitcoin.

Futures markets not only offers the option to go short, but also provides a leverage platform and this may draw in investors looking to boost earnings, though caution will is needed with Bitcoin's volatility having shown its teeth in recent days. In an interview on business network CNBC, North American Securities Administrators Association President Joseph Borg said he observed some people taking out mortgages on their house to buy bitcoin.

The futures are cash-settled contracts based on the auction price of bitcoin in United States dollars on the Gemini Exchange, which is owned and operated by virtual currency entrepreneurs Cameron and Tyler Winklevoss. JPMorgan Chase CEO Jamie Dimon has called bitcoin "a fraud".

Of course, some folks are still not convinced that Bitcoin is ready for use with such financial instruments, but the incredible growth in value of the cryptocurrency - 1,600 percent this year alone - means that it's impossible to ignore the possibilities and opportunities that it could afford.

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In a major step towards legitimising the virtual currency, the Bitcoin has begun trading on a major United States exchange.

In other words, investors are anticipating that bitcoin will keep pushing higher. 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.

Prices of the CBOE Bitcoin futures contracts, which expires in January, jumped to $18,800 (£14,000) today morning, from $15,000.

Several major banks have approached the launch of bitcoin futures cautiously, given concerns over the validity of cryptocurrencies.

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