‘Just figuring out its sea legs’

'Just figuring out its sea legs'

Trading in bitcoin futures has begun on the CBOE. The open has been quiet.

At 6:35 PM ET, 341 lots had traded, according to one market maker, with each lot representing one bitcoin. The last print was $16,000, which is a premium to the spot price on the Gemini exchange, which was $15,680.

Doug Cifu, CEO of Virtu, one of several market makers in the Cboe bitcoin futures, said he is posting bids and offers for the futures based on the spot price on the Gemini exchange. As the start of futures trading approached, the spot priced swung wildly.

Shortly before the start of futures trading, at 5:55 PM ET, the spot price on Gemini was $14,610. At 6:03 PM, three minutes after the start of futures trading, the price rocketed to $15,900.

Given the wild price swings in bitcoin—the price on the Gemini exchange has doubled in about a month—interest in bitcoin futures has been high. Whether the start of futures will reduce volatility in bitcoin is still unclear.

Cifu is not surprised by the relatively quiet start. “It’s a young market, just figuring out its sea legs. It will find its level, like every market does.”

Nor is it clear if futures trading will make bitcoin any more respectable. What is clear is that it is a further step toward (limited) regulation, and at least makes parts of the bitcoin universe more transparent.

“This is your first opportunity to take a bitcoin deriviative and put it on a centrally cleared exchange that has transparency,” JJ Kinahan, Chief Derivatives Strategist at AmeriTrade, told me.

Cifu definitely believes more transparency will help: “I would not have participated in this if it was not on a regulated exchange.”

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