Within three hours after its listing of bitcoin futures, the website and online trading platform of the Chicago Board Options Exchange (CBOE) were inaccessible, due to an unexpected spike in demand and volume.
According to Tokyo-based technology journalist Yuji Nakamura, CBOE bitcoin futures processed $401,600 worth of trades within the first 20 minutes.
CBOE bitcoin futures pretty quiet so far. Just tiny little lots traded through the retail brokers I guess. Only $401,600 trading in the first 20 minutes pic.twitter.com/cmOgBzHUuf
— Yuji Nakamura (
@ynakamura56) December 10, 2017
Only the Beginning, Billions Expected to Flow Into Bitcoin Market
Upon its debut earlier this year, the US Commodities and Futures Trading Commission (CFTC)-approved bitcoin derivatives, futures, and options exchange LedgerX announced that it had settled $1 million throughout its opening week, a period in which the exchange planned to clear minimum volumes to test the system.
A similar situation had occurred with CBOE during the first few hours since its listing of bitcoin futures. A sudden spike in volume and demand from institutional investors and retail traders in the traditional finance industry led the CBOE trading platform to become inaccessible for a brief period.
Over the next few weeks, institutional investors and investment firms with hundreds of billions of dollars in capital are expected to invest in the bitcoin market. Given that large-scale hedge funds are restricted to invest a minimum value of a few hundred million dollars, it is likely that in the short-term, billions of dollars will be invested in bitcoin.
Throughout the past month, several analysts expressed their concerns over the possibility of shorting bitcoin at a larger scale through bitcoin futures and CBOE’s futures exchange. Some analysts claim that excessive shorting of bitcoin could lead the price of the cryptocurrency to plunge.
However, as Zerohedge reported on December 11, investors have been paying premiums to invest in bitcoin. Currently, the price of bitcoin futures is up by over 20 percent since open. XBT/F8, the main bitcoin futures contract listed on the CBOE’s trading platform, is being traded at over $18,210, with a premium of $1,960.
Mid to Long-Term Trend
Based on the performance of bitcoin futures on the CBOE exchange over the past 6 hours, it seems evident that the demand for bitcoin from the traditional finance market is increasing at an exponential rate.
As BitMEX business development head Gwen Dwyer and JPMorgan global markets strategist Nikolaos Panigirtzoglou have noted throughout this week, the introduction of bitcoin futures to the global finance market will further solidify bitcoin as a major asset class by increasing its liquidity and stabilizing its market.
“In all, the prospective introduction of bitcoin futures has the potential to elevate cryptocurrencies to an emerging asset class. The value of this new asset class is a function of the breadth of its acceptance as a store of wealth and as a means of payment and simply judging by other stores of wealth such as gold, cryptocurrencies have the potential to grow further from here,” said Panigirtzoglou.
On December 18, another major options exchange CME Group, the second largest exchange in the global market behind CBOE, is scheduled to list bitcoin futures. Several hedge funds including the $95 billion Man Group have already announced that they plan to commit to bitcoin investment upon CME’s launch of its bitcoin futures exchange in the next few weeks.