The first-ever Bitcoin future jumped after it began trading on Sunday as the increasingly popular virtual currency made its debut on a major U.S. exchange. The futures contract that expires in January surged more than US$3,000 to US$18,010 four hours after trading launched on the Chicago Board Options Exchange. The contract opened at US$15,000, according to data from the CBOE.
The CBOE futures don't involve actual Bitcoin. They're securities that will track the price of Bitcoin on Gemini, one of the larger Bitcoin exchanges.
The start of trading at 5 p.m. Central time overwhelmed the CBOE website. Due to heavy traffic on our website, visitors to www.cboe.com may find that it is performing slower than usual and may at times be temporarily unavailable, the exchange said in a statement. But it said the trading in the futures had not been disrupted.
Another large futures exchange, the Chicago Mercantile Exchange, will start trading its own futures on Dec. 18 but will use a composite of several Bitcoin prices across a handful of exchanges.
The price of a Bitcoin has soared since beginning the year below US$1,000, hitting a peak of more than US$ 16,858 Dec. 7 on the Bitcoin exchange Coindesk. As of 9:10 p.m., it was at US$ 16,405.76 on Coindesk.
Futures are a type of contract in which a buyer and a seller agree on a price for a particular item to be delivered on a certain date in the future, hence the name. Futures are available for nearly every type of security but are most famously used in commodities such as wheat, soy, gold, oil, cocoa and, as dramatized in the Eddie Murphy and Dan Aykroyd movie Trading Places, concentrated frozen orange juice.
The futures signal greater mainstream acceptance of Bitcoin but also open up Bitcoin to additional market forces. The futures will allow investors to bet that Bitcoin's price will go down — a practice known as shorting — which currently is very difficult to do.
How much actual investor interest there will be in these Bitcoin futures is still up in the air. Many larger Wall Street brokerages and clearinghouses, including Goldman Sachs and JPMorgan Chase, are either not allowing customers to trade Bitcoin futures or only allowing select clients to do so. Other brokerages are putting restrictions on the amount of margin a trader can use in Bitcoin futures, or putting limits on the amount that can be purchased.