Bitcoin Futures Trading begins on CBOE Exchange

For the first time, Bitcoin has begun to trading on a major exchange.

23:00 GMT Sunday in Chicago the digital currency Bitcoin launched on the CBOE futures exchange allowing investors to bet on whether Bitcoin prices will rise or fall.

Bitcoin’s introduction to the CBOE has been seen by some as a step towards legitimising the currency , the move is expected to be followed next week by a listing on the rival Chicago Mercantile Exchange.

Its value had surged in the run-up to its futures debut, which saw it rise another 17% to above $18,000.

CBOE trading saw the Bitcoin futures contract expiring in January start at $15,000 before rising to above $18,000. The contract is based on the price of Bitcoin as quoted on the Gemini exchange.

According to Coindesk.com, anticipation of the first mainstream listings have helped the controversial currency soar past $10,000 and then over $17,000 on Thursday before retreating. The price of Bitcoin stood at about $16,600 on Monday.

If Bitcoin prices rise or fall by 10%, CBOE rules suspend trading in an attempt to reduce wild fluctuations.

However, the regulator has warned investors about the “potentially high level of volatility and risk in trading these types of contracts”.

What are futures?

Futures are contracts that allow investors on the price of something going up or down at a future date.

Investors can now be exposure to Bitcoin without actually owning them or without dealing through the fiat exchanges, Bitcoin futures will also make it easier for more investors to buy the crypto-currency, by removing the need for them to set up a special digital Bitcoin wallet.

Futures are typically based on the price of a real commodity – such as gold & oil.

Some of the world’s biggest derivatives brokerages which form part of the Futures Industry Association, has criticised the CFTC’s decision, arguing that insufficient attention has been paid to the high risks involved.

It is also worth noting that Bitcoin is not regulated by any country’s central bank and has no universally recognised exchange rate.