CBOE Bitcoin Futures: So Far So Good as BTC Price Holding High

It appears that the launch of Bitcoin futures contracts by the Chicago Board Options Exchange (CBOE) have had a majorly positive effect on the cryptocurrency’s price, as it soared from under $15,000 to over $17,000 today, before stabilizing around $16,500 for now.

Many believed the futures would lead to a correction, as traders generally ‘buy the rumor and sell the news’, and while there was sideways movement and dips leading up to the launch, Bitcoin skyrocket at 5 PM CT and after swinging majorly, settled above $16,000.

The CBOE futures, trading under the XBT ticker, can be followed on their official site (with a 10-minute delay).

The listed XBT/F8 contracts will be settled first, on January 17, 2018, as each contract settles two days before the third Friday of every month. Hence, the XBT/G8 settles on February 14 and XBT/H8 settles on March 14.

In simplified terms, futures contracts work whereby two parties lock-in a price, where one feels it may go higher (long) and the other feels it may drop (short). At the expiration date, the contract is settled according to the price from an agreed upon index, and if the price goes higher, the long contract gets the difference while the short contract ends up paying it (and vice versa, if the price drops, the long ends up paying the initial price—adding money to cover the drop in value—while the short ends up receiving the difference).

In essence, futures contracts allow market speculators to bet on the price of Bitcoin without having to deal with the technicalities and risks involved with buying, selling and storing cryptocurrencies.

Since all these contracts are settled in fiat (USD), they do not directly impact the price of Bitcoin, which has been a cause for concern; but regardless, the influx of institutional investors will bring additional attention to the crypto market, which has a lot of room for growth and will welcome new money that comes with increased exposure.