BITCOIN: A Cryptocurrency Takes the Whole World on a Roller Coaster Ride to Financial Hell

Bitcoin Futures Top $18,000, Soar 20% From Open – Halted for Second Time

Update: At 10:05pm ET,  the CFE halted trading in Cboe Bitcoin Futures (XBT), in accordance with CFE Rule 1302(i)(ii) which defines the threshold for the halt as a 20% surge. XBT will re-open for trading approximately five (5)minutes from the time of the halt.

Bitcoin Futures have topped $18,000 for the first time…

It was reopened at 10:10pm ET.

All of which is odd because Bob Pisani and the rest of the mainstream said that the opening of Bitcoin Futures would bring about the demise of the cryptocurrency due to the ability to short?

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Update: At precisely 8:31pm ET, the CBOE instituted the first ever XBT trading halt, which lasted for two minutes according to a notice on Cboe’s website. XBT contracts have since resumed trading. As a reminder, the Cboe can halt trading for 2 minutes after 10% swings, and 5 minutes at 20%, an attempt to prevent wild swings.

Notably earlier in the evenig they exercised discretion and decided nto to halt the XBT trading as the first opening spike occurred…

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The CBOE’s website crashed within minutes of the CBOE open on Sunday – which also marked the launch of the first bitcoin futures to trade on a major exchange…

… while the price of a bitcoin spiked 10% in five minutes as the new contract with the ticker XBT fluctuated wildly.

The embarrassing crash happened as the entire financial world was closely watching the first historic institutionalization of bitcoin:

Shortly after the initial snafu, the CBOE tweeted that “visitors to may find site is performing slower than usual and may at times be temporarily unavailable” due to heavy traffic adding that “all trading systems are operating normally.”

“Given the unprecedented interest in Bitcoin, it’s vital we provide clients the trading tools to help them express their views and hedge their exposure,” said Ed Tilly, chairman and CEO of CBOE Global Markets, in a statement earlier this month. Trading in Bitcoin futures will be free through the end of December.

Despite the surging interest in what was taking place on the CBOE, a little over an hour after the launch, some 555 XBT jan 2018 futures contracts had traded – equivalent of roughly $9 million notional…

… and while futures market depth was virtually non-existant in early trading, the bid/ask spread in the orderbook has since shrunk as depth increased, and is now “only” $50.

Indeed, as the tradestation tick chart below shows, as we expected, today’s launch is hardly euphoria bonanza some had expected.

Going further out on the curve, just one March 2018 contract has traded one hour into trading.

What is also notable, is that while at least in early trading, bitcoin futures appeared to be trading with a premium as much as $400 above cash, according to Jared Bilkre, the XBT future was trading around fair value, defined by the Gemini auction price for bitcoin off which the futures are priced.

Still, it remains to be seen if the futures and spot prices will converge, with the spread still will in the hundreds of dollars while volatility refuses to ease.

As a reminder, the CBOE plans to impose trading limits to curb volatility, halting trading for two minutes if prices rise or fall 10%, and a five-minute halt kicks in at 20%. Margins for Cboe bitcoin futures, which will be cleared by Options Clearing Corp., will be at 40% or higher.

So far there have been no futures trading halts.

Meanwhile, the price of spot Bitcoin surged immediately after the 6 p.m. open, climbing about 10%, or $1,500 on GDAX to over $16,200, before giving back much of the early gains…

… as the excitement over this historic moment slowly fades away.

And while for at least one person today’s first day of trading will never be forgotten, the first documented trade appears to have been a short.

 To which there was a caveat…


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