It was expected that futures would come to control Bitcoin especially to reduce its volatile nature. Contrary to this immediately after CBOE launched Bitcoin futures Bitcoin price moved up sharply. Futures started trading at 5 pm central time on 10th December, and the price of the futures was $15,000 matching the price on Gemini exchange.
Introduction of Circuit Breakers
Within a period of five hours, the price at Gemini had moved to $16,800.The futures which are expected to expire in January 2018 are now trading at $18,500 which is $3,500 rise. This rapid movement of price has already triggered two of the circuit breakers, and they are moving towards triggering the third one.
In order to take Bitcoin’s Volatility, CBOE came up with circuit breakers to give traders a chance to stop and check again especially when there are huge price movements. In fact, the circuit breakers are made in a way that every time there is a gain or loss of more than 10% there is a break of about two minutes in trading. When there move is more than 20% then the break in trading is about 5 minutes.
As we reported earlier the launch of Futures by CBOE triggered a lot of demand in a way that CBOE’s website crashed. Within five hours after the launch, more than 2000 contracts had already traded. In the trade, each contract represented one Bitcoin showing that an estimation of about $30 million was traded within very few hours. This trade happened during the weekend and considering the fact that Wall Street traders work during weekdays only this first week of trading is expected to be a very good week in futures trading.
Futures seem to have brought new push in Bitcoin trading. This is because traders feel secure that futures are being controlled by the market giants. If the circuit breakers manage to control the volatility of the currency, then more people may be willing to invest.